Outlook 5 December '13

after market update: actual S&P -7.7 (-0.4%); There was a lot of uncertainty today with unemployment numbers out tomorrow and the FOMC meeting next week.  The ECB today gave no further indications of easing.  Will the spigot of easy money get turned off in the near future?  A growing divergence between the collective mood signals and the stock market indicates a big move is coming up.  Will there be a major negative shift in social mood or a major bounce in the markets?

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Overview: Social mood is reflecting a willingness to take action; this may include protests, and possibly violence.  Themes in the news reflect a refusal to be deluded with too much hopefulness.  Markets direction today is uncertain. 

Today's Market Outlook is nearly unchanged (0% to -0.1%).  Both the social mood signal and the signal from themes in the news are close to zero.  The market is currently oversold relative to social mood, which may give the market a slight boost over today's signal.  The projected stock market change for today is shown in the chart below.

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Near term mood outlook: willingness to take action; this may include protests, and possibly violence.  Themes in the news reflect a refusal to be deluded with too much hopefulness.  The combined pattern of news and social mood reflects a high global risk of violence, protests, and a high risk of terrorist activity.  

 

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.  However, the social mood signal is now reaching its next support level.  A market bounce might try to take place here.

 

Longer term outlook: The overall social mood trend has been in what appears to be a topping process for many months.  There are no clear signals that this process will be over anytime soon.  Yet, a sharp market drop of more than 15%, likely within the next few months, is indicated by long term mood and market charts.

 

Today’s social mood signal is -1.0 S&P points as of the time of this posting.  On a daily basis, markets tend to follow social mood more often than not. 

 

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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.