Outlook: 24 December '13

after market update: actual S&P +5.3 (+0.3%).   Markets again continued up.  The divergence between social mood and markets is becoming extreme.

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Overview: A developing pattern in the contrast between social mood and the news is reminiscent of when the Boston Marathon event occurred.  There is an elevated risk for a similar type event (likely on a smaller scale).  The social mood pattern for today reflects aggression and an awakening to reality.  Themes in the news reflect general "bad news."  Markets are near a "ceiling" area.

Today's Market Outlook is nearly unchanged to moderately down ( -0.1% to -0.2%).  Both the social mood signal and the signal from themes in the news are down, and the market is overbought relative to social mood.  The projected stock market change for today is shown in the chart below.

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Near term mood outlook:  aggression and an awakening to reality.  Themes in the news reflect general "bad news."  The combined pattern of news and social mood reflects aggression, violence, and a rising background of global economic concerns.  

 

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. The signal is at a significant resistant point and may have difficulty moving up further-- i.e. markets may be hitting a "ceiling."

 

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, may be near.

 

Today’s social mood signal is -4.2 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 -1.2 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.