Rising Global Instability: Outlook 19 December '13

after market update: actual S&P -1.05 (-0.1%). With rising uncertainty, markets were little changed today.  Markets continue to be seriously overbought relative to social mood.  Today's tragic incident in London (Apollo Theatre ceiling collapses in London) indicates the disaster/tragedy configuration is still in play on a global scale.  We are no longer looking for a specifically U.S. disaster/tragedy.  The incidents at Arapahoe High School and Reno Hospital appear to have been sufficient to move out of the danger zone for now.

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Overview: The social mood pattern for today reflects aggression and rising uncertainty.  Themes in the news reflect instability and uncertainty.  Market signals are up, however, markets are highly overbought relative to social mood so anything can happen.  We had expected to remove the U.S. disaster/tragedy watch today, but will wait at least until tomorrow as the configuration is not clearly resolved.  (see More Info on Next U.S. Tragedy).

Today's Market Outlook is nearly unchanged to moderately up (+0,1% to +0.3%).  Both the social mood signal and the signal from themes in the news are up.  The projected stock market change for today is shown in the chart below.

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Near term mood outlook:  aggression and rising uncertainty.  Themes in the news reflect destruction, deterioration, or disaster.  The combined pattern of news and social mood reflects global aggression, violence, and an elevated risk for protests and 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. 

 

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 in its early stages.

 

Today’s social mood signal is +4.6 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 +1.8 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.