Pushing Against a Ceiling: Outlook 9 January '14

after market update: actual S&P +0.64.  After a sideways struggle, markets ended slightly up, right in line with the mood signal.  Yet, the VIX also ended slightly up.  Social mood is pushing against a ceiling.  Is a change in the making?

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Overview: Collective mood reflects trying to make the best of opportunities and seeing with rose colored glasses; also sacrifice for a cause.  Global indicators show increased risk of protests, instability or terrorist activity.  Mood signals for the day indicate little change in the market is likely.  Major negative or tragic international news (non-U.S.) is near and expected to come "over the horizon" in the week following January 10th.

 

Near Term: Global trends of anti-establishment, instability, and greed are prominent.  Near term social mood trend is positive, and is pushing against a "ceiling."

 

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: +1.3 from Google Hot Trends, +0.6 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.