Uncertain Exuberance: Outlook 21 Jan '14

after market update: actual S&P +5.1.  Great day of exemplifying social mood playing out in the markets-- a large rally followed by a large drop followed by a mediocre rally.  Awesome!

 

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Overview:  Collective mood shows sharply rising aggression and willingness to take action. Mood signals for the day indicate a market that would like to rally significantly, but is still overbought relative to social mood and might have difficulty making or maintaining the large upward move suggested by mood signals.

 

Near Term: Global mood trends show sharply rising uncertainty and contrariness.  This is combining with rising aggression and willingness to take action.  Social mood trend had been turning down, but has reached support.  This may pause or reverse the downtrend in the near term. 

 

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: +4.5 from Google Hot Trends, +18.6 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 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.