Outlook 11 Feb '14

Overview:  Collective mood indicates increasing risk of violence, protests and terrorist activity.  Mood signals for the day indicate a moderate selloff in the markets is likely.  Yesterday's information confirmed suspicions that a high impact U.S. disaster or tragic event is within a week to ten days away. The big ice storm known as Nika along with power outages and state disaster declarations last week was not enough to dissipate the disaster pressure.  More details will be presented in a few days of likely event type and timing.

Near Term: The social mood trend had been turning down sharply, and bounced at support near S&P 1740 (see Google trends chart below).  It has recently broken down below that support indicating further downside in the markets is likely. 

 

Long Term: Collective mood has been in a many month long process of topping.  Long term indicators are flashing "extreme caution," and are just below support, indicating a significant breakdown may be in progress.  The impact of human and natural disasters 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: -5.1 from Google Hot Trends, -3.1 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.