Tuesday, February 25, 2014

Violent Uncertainty: Outlook 26 February '14

after market update: actual S&P +.04  Markets were extremely uncertain, and are now extremely overbought relative to daily social mood; a reckoning is very near.  

(click to enlarge)

- - -
Overview:  Collective mood indicates rising risk of violence and increasing uncertainty globally.  Markets are extremely overbought relative to daily social mood signals.  A slight sell-off in the markets is likely. 

Near Term: Mood signals have not rallied to record highs along with the markets (see Google trends chart below). and are breaking down below support.  A sharp drop in the near term 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: -6.2 from Google Hot Trends, -0.1 from Themes in the News.  The projected stock market change for today is shown in the chart below.

  (click to enlarge)
 
 
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.
 
 (click to enlarge)


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.    
 

(click to enlarge)
 
 
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.

No comments:

Post a Comment