Outlook 11 December '13

after market update: actual S&P -20.4 (-1.3%); Markets were down hard today as investors find it more likely that the FOMC will begin tapering Quantitative Easing.  The sharp downturn is in line with the near term mood outlook as well as the near term market outlook (below).  However, with markets oversold versus the daily signal, will they at least try to bounce overnight or tomorrow?

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Overview: The social mood pattern for today reflects desperate aggression.  Themes in the news reflect destruction, deterioration, or disaster, with a possible connection with government or government intervention.  Markets may be mixed and confused as the question over long term direction is pondered.

Today's Market Outlook is nearly unchanged to slightly down (0% to -0.2%).  The social mood signal is slightly down, and the signal from themes in the news is near unchanged.  Watch for either a confused, mixed market or a possible abrupt shift. The projected stock market change for today is shown in the chart below.

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Near term mood outlook: desperate aggression.  Themes in the news reflect destruction, deterioration, or disaster, with a possible connection with government or government intervention..  The combined pattern of news and social mood reflects an elevated global risk of violence, protests, and an elevated risk of geopolitical escalation; there are rising economic concerns in the background.  

 

Near term market outlook: The social mood signal is indicating a serious downturn in social mood that is likely to be followed by the markets. 

 

Longer term outlook: The overall social mood trend has been in what appears to be a topping process for many months.  This topping process appears to be in its final stages.  A sharp market drop of more than 15% indicated by long term mood and market charts, appears very close to beginning.

 

Today’s social mood signal is -2.9 S&P points as of the time of this posting.  On a daily basis, markets tend to follow social mood more often than not.  Overall, social mood trend changes often precede market trend changes.

 

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Today’s news signal is -0.3 S&P points as of the time of this posting.  News tends to follow the general trend of the market, but on a daily basis, can either lead or lag the movement of the market.    

 

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Note: data for U.S. social mood are scores in eight MoodCompass categories of Google Hot Trends, data for news are scores of top Google U.S. news stories.  Scores are converted to 4 inputs to the Market Mood Model.  The output is a conversion of mood data to estimated S&P point change.  Stock market data source: Google Finance.  This is posted as a public service, and to enhance exposure to our research.  It is not intended to be trading advice.