Outlook 14 January '14

after market update: actual S&P +19.7.  Collective mood signals showed little change to moderate sell-off, but today the markets went up and up.  Because of this markets are now highly overbought relative to collective mood signals.

 

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Overview: A new global chapter continues to unfold, and things are looking shaky.  Collective mood reflects the perception of a new chapter beginning.  Themes in the news reflect a perception of instability and uncertainty.  Mood signals for the day indicate little change to a moderate sell-off in the market is likely.

 

Near Term: Global mood trends show rising instability and uncertainty.  Near term social mood trend has been pushing against a "ceiling"(see Google Hot Trends chart below) but seems to now be in process of turning down. 

 

Long Term: Collective mood has been in a many month long process of topping, but there is no sign that a major market shift is imminent.  The impact of human and natural disasters of late has been relatively low, but the trend is toward increasing impact.  Over time, this may wear on both mood and socioeconomic stability.

 

Today's Signals: -7.4 from Google Hot Trends, -1.8 from Themes in the News.  The projected stock market change for today is shown in the chart below.

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Mood signals from Google Hot Trends: On a daily basis, markets tend to follow social mood more often than not.  Overall, social mood trend changes usually precede market trend changes.

 

  (click to enlarge)

Mood signals from themes in the news: 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.    

 

(click to enlarge)

 

 

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.