Social Mood Indicators Flashing CAUTION: Outlook 23 January '14

after market update: actual S&P -16.4.  Traders apparently sensed the uncertain mood and the shift in long term signals (see below).  Markets sold off almost 1%, in spite of the daily signal being near unchanged.

 

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Overview:  Collective mood shows aggression and willingness to take action combined with uncertainty about what's going on in the world at large. Mood signals for the day indicate the market is likely to remain nearly unchanged.  However, long term indicators are now flashing "CAUTION."

 

Near Term: Global mood trends show uncertainty and contrariness.  This is combining with  aggression and willingness to take action.  The social mood trend had been turning down, but has reached support.  This may pause or reverse the downtrend in the near term. The market equivalent of this mood signal area is near S&P 1780.

 

Long Term: Collective mood has been in a many month long process of topping.  Long term indicators are flashing "caution," but there is no definitive signal 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: +3.8 from Google Hot Trends, +0.7 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.

 

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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.