Uncertainty vs. Hope: Market Mood July 13-17, 2015

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The week of July 13 is characterized by a struggle between uncertainty about the global situation and the desire to hope that everything is going to be OK.  This will create an unusually choppy (or whipsaw) condition in the markets.  Spatial analysis shows risk aversion in the United States to be slightly less this week than last week.  While conditions are not yet clearly bullish, they appear to be less bearish than the previous week.

 

 

Tentative optimism is projected to wane early in the week and be replaced by a nervous hope midweek.  By the end of the week, it may seem that it was too early to hope, as strong market moves return to the picture.

 

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.

Moving Away from Pessimism: 4 December '13

after market update: actual S&P -2.3 (-0.1%); Good economic news seemed bad, as anxiety about tapering began to show.  Markets tried to drop hard (down 3/4%), but social mood was wanting to move away from pessimism.  After a struggle, markets ended the day almost unchanged.

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Overview: Over the last few days, people have collectively been trying on more pessimistic attitudes, but they don't quite fit. Social mood is reflecting a willingness to take action, which may include protests, and possibly violence.  Yet, themes in the news reflect a tendency to look at any "bad news" through rose colored glasses.  Markets are likely to be up today. 

Today's Market Outlook is slightly up to strongly up (0.2% to +0.7%).  Both the social mood signal and the signal from themes in the news are positive.   The projected stock market change for today is shown in the chart below.

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Near term mood outlook: a willingness to take action, including protests and violence.  Themes in the news reflect a tendency to look at "bad news" through rose colored glasses.  The combined pattern of news and social mood reflects a high global risk of violence, protests, and a high risk of terrorist activity.  

 

Near term market outlook: The social mood signal is indicating a serious downturn in social mood that is likely to be followed by the markets.  However, the social mood signal is now reaching its next support level.  A market bounce might try to take place here.

 

Longer term outlook: The overall social mood trend has been in what appears to be a topping process for many months.  There are no clear signals that this process will be over anytime soon.  Yet, a sharp market drop of more than 15%, likely within the next few months, is indicated by long term mood and market charts.

 

Today’s social mood signal is +4.0 S&P points as of the time of this posting.  On a daily basis, markets tend to follow social mood more often than not. 

 

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Today’s news signal is +12.1 S&P points as of the time of this posting.  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.

News and Markets turning Sour: Outlook 11 Sept '13

after market update: actual S&P +5.09 (0.3%) Markets struggled entire session, down or sideways for much of it.  "Eek out" was a great description of today's action.

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Overview: Today's mood and news signal show a sense of continued positive developments.  However, signal momentum indicates the upside is losing steam, and a reversal is near (not necessarily today).  Markets could eek out another 7-10 points today, but if so, it should be a struggle to hold such gains through day's end.

 

Near term outlook: The social mood pattern corresponds with volatility and violence. Common news events associated with the current pattern are related to instability, terrorist activity, violent protests, fires and events reflecting themes of confusion or surprise.  Natural events associated with this pattern are earthquakes and violent storms.

Longer term outlook: The social mood trend has turned up, but may be losing steam.  A reversal is near.  

Today's Market Outlook is Up, but with increased risk of trend reversal.  Both the social mood signal and news signal are moderately positive as of the time of this posting.  However, both social mood and news signal momentum indicate an increased risk of trend reversal.

Today’s social mood signal is +11.5 S&P points.  Markets tend to follow social mood more often than not.  Mood signal is  moderately positive at the time of this posting, but social mood momentum indicates a trend change is near.

  

 

 

Today’s news signal is +13.6 S&P points.  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.  As of the time of this publication, the news signal is up, but news signal momentum indicates a trend change is near.  The huge divergence between news level and the stock market actuals indicate that extremely positive or extremely negative news could be very near.

 

Outlook 26 Aug '13: Mood Up in spite of Syria; Market Positive/Mixed

Today's market outlook is positive/mixed.  The social mood signal is strongly positive coming into the Monday open.  The news signal goes from slightly positive over the weekend to negative for Monday.

Today’s social mood signal is +9.1 S&P points (entire weekend signal, Sat thru today: +20.8).  Social mood has been steadily pushing upward since mid-week last week, and markets have been following.  There is no sign of any change in the social mood at this time.

after market update: actual S&P -6.7
 

Today’s news signal is -5.7 S&P points (entire weekend signal, Sat thru today: +2.5).  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. 

 

Near term outlook: The social mood pattern corresponds with optimism, aggression, and over-exuberance.  Common news events associated with the current pattern are sports, heroics, and geopolitical escalation.  Also, events that portray a theme of action, fires, and volcanoes.  The social mood pattern tends to go with growth and positive markets, the mood pattern taken from the news tends to go with destructive events and deteriorating socio-economic conditions.

end of day update-- some top news stories with today's themes:

Syria chemical weapons attack: Kerry accuses Assad of 'a moral obscenity'

San Francisco Girds for Possible Threat to Water From Wildfire

Obama awards soldier Medal of Honor for 2009 heroics

Debt ceiling approaching: Will US hit debt ceiling in mid-October?

Longer term outlook: The social mood trend is down, although it is currently in a short term rebound.  The stock market is 10% above what social mood will support.  This divergence should be approaching resolution over the next few months.