When Global Tempers Flare: Outlook 9 December '13

after market update: actual S&P +3.3 (+0.2%); Riots in the Ukraine.  S. Korea extends its airspace in defiance of China.  This angry collective mood is an example of a world that is "over-heated."  Is this all just background noise, or is the global economy about to get woken up with a splash of cold water?

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Overview: Social mood shows a strong directed push against the established order.  Themes in the news reflect aggression, and possible military escalation.  Markets may start out up, but an abrupt change is possible later in the day.

Today's Market Outlook is slightly down to moderately up (-0.1% to +0.6%).  The social mood signal is slightly down, and the signal from themes in the news is moderately up.  If markets start off up, watch for a possible abrupt shift late in the day. The projected stock market change for today is shown in the chart below.

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Near term mood outlook: shows a strong directed push against the established order.  Themes in the news reflect aggression, and possible military escalation.  The combined pattern of news and social mood reflects a high global risk of violence, protests, and a high risk of geopolitical escalation.  

 

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 -2.0 S&P points as of the time of this posting.  On a daily basis, markets tend to follow social mood more often than not.  Overall, social mood trend changes often precede market trend changes.

 

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Today’s news signal is +10.5 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.