Sunday, February 12, 2017

Tea Leaves

This post was written by a good friend and philosopher, Daniel Reader when I was still at the MarketMood.net site.

Those of us that frequent these pages understand that the news doesn’t drive market prices – or anything else, for that matter.  The news is driven by…something else.  The same may be said for market fluctuations.  The market is not the driver of anything – instead, market movement is the result of something else.  What that Something Else actually is turns out to be the subject of much philosophical debate.  Beyond identifying it, finding that thing, or force, is just as esoterically challenging, and has most frankly been the purview of religion over the centuries.  But what if that thing, that Force, actually left tracks in the sand, or resonated with some audible, measurable pulse?  And even more magically, what if those tracks pointed to a future condition merely days away?  Now, that would be useful information!  We have but to find the signal, and figure out how to interpret it, and a window into next week opens before us.  This is precisely what Market Mood purports to do.

While making no claim at all about the Force behind the phenomenon, Market Mood has identified a signal, or indicator, that seems to be just such a pulse.  Dr. Cari Bourette tracks the interests of the United States by watching the things that Americans are watching.  She charts the Google search trends of hundreds of millions of people on a daily basis, getting numbers for just what is juicing people today -- and a fascinating pattern emerges.  The arcane charts of squiggly lines she delivers seem opaque at best, but what emerges is a complex dance of emotional drivers – moods – that seem to match real-world events days, and even weeks or months in advance, with extraordinary accuracy.  Think about that.  What Dr. Cari is doing is taking the pulse of the world, and using that to tell us what will happen in the future.  This is nothing short of miraculous.

The philosophical implications of this are simply staggering, and will be explored at greater length in future articles.  But what is important for us to understand now, is that we have available through MarketMood.net a reliable market indicator that does not use market performance as its basis.  In this sense, it is unique, and revolutionary.  Dr. Cari provides us with actionable market information that is in no way derived from market conditions, or performance, of any kind.  No other system or method, black box or otherwise can make this claim.  Among all of the implications of this claim is the certainty that no past assumptions, rules, patterns, or any other investment governance plays any role whatsoever in the delivery or interpretation of the market guidance.  Indeed, Dr. Cari’s goal is not to provide investment advice at all – simply to tell you which way the market is likely to move, and let you determine your own trading strategy accordingly.  This is refreshingly straightforward, and should pique the interest of novices and seasoned investors alike.  Remarkable!

A New Geopolitical Chapter: Feb 11-17, 2017

This week, a new chapter, or new paradigm begins.  Why do I say that?  In the research I’ve done following the relationships between changes in social mood, the markets, and the news, I’ve found that the patterns found in the things we pay attention (i.e. top internet search trends) to on a daily basis show up in the markets and news stories about three days later.  When one looks at the patterns in the top weekly search trends they show up in the markets and types of news stories about three weeks later.

The top search trends 3 weeks ago included Melania Trump and Chinese New Year.  It was week number one of the Trump administration.  It was also the beginning of the Year of the Fire Rooster.  In the analysis of the pattern for this week two primary things show up.  First, it’s a pattern of a “new paradigm.”  We’re about to turn the page into our next collective “chapter.” This should show up as a change in the news cycle.  There could be a new focus or new tone in what’s being reported.   In the markets this should appear as new market behavior and/or a new direction.   Second, there is a rise in the “vulnerability factor.”  In the news, people may seem a bit more reserved or anxious.   In the markets, this should appear as increased risk aversion.  Finally, the mood pattern over the next few weeks shows that there’s a good chance that this new chapter will include increased attention on geopolitics and foreign affairs.



Above is a picture of this week’s internet search trends converted to four primary mood qualities.  At MarketMood.net this is further converted to expected changes in stock market points and commodity prices, and discussed in our member trading room.

It’s a new day, a new week, and a new chapter.  May yours be a good one!

Friday, February 3, 2017

An Emotional Week! Feb 4-10, 2017

The world has been struggling to adjust to the unique style of the new Chief Executive of the United States.  With all the turmoil observed and experienced in the U.S. over the last couple of weeks, it’s difficult to imagine that the coming week could be set apart as “An Emotional Week.”  Yet, apparently that is just what we are about to get!

For whatever reason, those things that we collectively focus on (as seen in the top internet search trends) show up in kind a short time later.  This can be seen in the types of stories that occur in the news, in the stock market, and in the general ambience of our lives.  When we look at those things that held our focus on a weekly basis, we get a good clue about the general mood and market behavior that are likely to show up three weeks later.

While our dataset has over 20 top internet search trends each week, just looking at the top few gives us a good bit of information.  The top three search trends that relate to the coming week are Inauguration, Martin Luther King Jr. Day, and the Dallas Cowboys.  To be able to combine these into a meaningful picture of our week, we first break them down into the themes these terms contain.  For this week:  President, ritual, new era, man, nostalgia, prejudice, tolerance, killed, sports, loser.  While an interesting combination of themes, it’s not yet clear why that leads to an “emotional week.”
The next step is to translate this into four primary mood qualities.  Graphically, this is what we end up with:


The side of this graph on the left, the “West” side , is related to emotions and the non-rational.  With “Expansive” slightly greater than “Controlled,” this is associated with passion, panic, and irrational decision making.  In the markets, a volatile week is likely.  It will be interesting to see how this week will be able to stand out from the last few in regards to “passion, panic, and irrational decision making.”   Also, with this in mind, I will do all that I can to be aware of that in myself, and take some deep breaths and a moment of thought before making any important decisions!

In our members’ trading room at MarketMood.net, besides a daily analysis of the social mood, we translate internet search trends into market forecasts for the coming days and weeks for the stock market, crude oil, gold, and the U.S. Dollar.  In this way, emotional weeks such as this one just ahead, does not have to be a liability!