Outlook January 8, '14

after market update: actual S&P -0.4.  Markets had a hard time today staying above the zero line.  As the Winter freeze begins to thaw around the country, will the volatility pick up?

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Overview: Collective mood reflects the global trend of aggression and/or violence, civilization vs. nature, also government or government intervention, and rising bad news in the background.  Mood signals for the day indicate a mild rally is likely.  Major negative or tragic international news (non-U.S.) is on the horizon.

 

Near Term: Global trends of aggression and violence should continue to be prominent.  Near term social mood trend is positive, but may be nearing a ceiling.

 

Long Term: Collective mood has not been keeping pace with the market "sugar high" of quantitative easing, 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: +3.4 from Google Hot Trends, +0.4 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 often precede market trend changes.

 

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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.    

 

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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.