Aggressive Surge Impacting Shutdown Talks: Preliminary Outlook for Monday

Over the weekend, the mood factor associated with aggressively pursuing group agendas surged in U.S. collective mood (see chart below).  It has not been this high all year.  At the same time, the capacity to understand a different point of view or pursue diplomatic negotiations is near the low for the year.  There is almost no chance of any resolution on the government shutdown anytime soon, with one possible exception.

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The only way for some type of budge in the current impasse would be for group identity to shift.  "My group" would have to include both parties.  In other words, instead of Tea Party or Democrat or anti-Obama, etc.  the majority would need to see "My group" as a larger whole, for instance, "American."  This may sound absurdly simple, but if it was that easy we would be there now.  The fastest way to get this type of shift would be to have an emergency or disaster that comes from "out there" affecting all or most Americans in some way.  This could be a human caused emergency such as a terrorist attack, a market crash, or even a natural disaster of some type.  It will be interesting if such an emergency shows up in the nick of time to create this cohesion and unity out of the chaos.  Otherwise, an agreement might have to wait until the social mood is more conducive to negotiations on its own.  It will get there at some point.

Preliminary Market Outlook: Moderately to Sharply Down
Monday's official outlook won't be released for another four hours, but here's what we got at this moment (see chart).  Social mood is near breaking down below support again.  Markets could be in for quite a tumble if nothing improves between now and Monday morning.

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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.

Violent Moves, Markets Down: Outlook 7 Oct. '13

after market update: actual S&P -14.3 (-0.85%); Markets started down almost 1%, climbed up to the top of our expected range (-0.3%), then dropped back down toward the lows.  The VIX, the so called "fear index," was even more reflective of the sharp deterioration in social mood over the weekend as it surged approximately 14% today. 

End of day update: News story reflecting today's social mood of aggressive and desperate-- White House, Senate Democrats step up pressure to raise federal debt ceiling

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Overview:  A U.S. government shutdown is in day 7.  Social mood reflects both aggression and desperation.  The mood depicted by themes in the news is uncertainty, confusion, and perceptions of chaos.  Markets are expected to drop up to 4% in the next few days.  This may or may not all occur today.  A mood trend change is in progress; this could signify that an end to the shutdown is only a few days away, or that hopes are at least about to rise.

Today's Market Outlook is Down to down sharply (-0.3% to -1.9%).  At the time of this posting, the social mood signal is sharply negative, and the signal from the news is moderately negative.  Markets are expected to drop up to 4% in the next few days.  This may or may not all occur today.  
 

Near term mood outlook: The social mood pattern corresponds with aggression and desperation.  Common themes associated with the mood pattern found in the news are the unexpected, chaos,  protests and terrorist activity.  The combined pattern, at times, accompanies global themes of violence, instability, and terrorist activity.

 

Near term market outlook: The social mood signal has clearly broken below support. A sharp drop in the markets of up to 4% is expected in the next few days.  It may or may not all happen today. 

 

Longer term outlook: The social mood trend is down.  The overall market trend should be down. 

 

Today’s social mood signal is -11.6 S&P points (-32.2 S&P points for the entire weekend Saturday through Monday).  Markets tend to follow social mood more often than not.  Signal has clearly broken below support. Markets should soon follow with a sharp break down.

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Today’s news signal is -1.9 S&P points (-5.2 S&P points the entire weekend Saturday through Monday).  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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Today's expected stock market range is calculated from -5.2 S&P points (news signal for Saturday through Monday) to -32.2 S&P points (social mood signal for Saturday through Monday), or-0.3% to -1.9%.