Does Crude Oil Signal a Mood for War?

The news can be a part of the story that goes along with where the market was already heading, but it's the mood or sentiment that is the cause.  I've noticed over the years that when crude is pointing up and the market is pointing down (per the mood generated forecast) that this is usually accompanied by Middle East geopolitical escalation.  That's why I said in Sunday's report (at Elliottwavetrader.net), "The {crude} chart implies at least the potential of a large bullish turnaround. Gearing up for some Iran/Syria news, maybe?"  There were already tensions when I posted that, but as long as I've been watching this, it appears that crude always goes up first before military action is taken (in the Middle East).  This is the Socionomic premise: mood => markets => news.

We like to have a reason why to explain what is happening in the markets.  If there is a final spike in crude and sharp drop in the stock market, perhaps it will be blamed on concerns about WWIII.  Yet, Avi Gilbert of Elliottwave.net was posting months ago about a 4th wave that would look like a scary crash.  Was he psychic?  It's simply that it's the pattern of things.

Elliott Wave Theory can tell you that at some point soon a large, sharp bearish move is likely.  These stock market patterns are displays of the general shape of our collective ups and downs.  At some point prior to major news or the next big market move, it will start to show up in what we are collectively focusing on, e.g. internet search trends.  The MarketMood model uses an algorithm to convert this into market movement for the stock market, gold, oil, and the U.S. Dollar.  The market will then reflect the social mood in how it moves, and finally, the news will conveniently provide a background story to give us a reason why (because we like to point to something "out there" as to why these things are happening).  Yet, wars will happen, it seems, only when the mood is right.

Market moves, mass casualty events, epidemics, and even natural disasters appear to follow the mood, not precede it.  I don't know that it can be stated unequivocally that our mood causes all of these things.  However, it does seem to precede them.  Socionomics, Elliott Waves, and the MarketMood model, are all based on this premise.  Social mood follows general patterns, which can be traced in the market.  Certain types of news are associated with specific mood patterns and Elliott Waves.  News doesn't cause any of it, it's just part of the background story that we point to "out there" to explain what was already in progress.  This is not how we are accustomed to thinking about our world, but it has been demonstrated over and over again, that this is indeed the way of it.  If you want to make news the cause of it, then perhaps you could say, "A possible war we don't know about yet, will cause crude oil to rise next week, and is causing us to focus on things today that resonate with that on the internet."  If that sounds a bit silly, then just stop saying the news is causing the market to move, or the future news and market moves are causing what we are thinking about or caring about today.  That would be a start.

This Week: Hope and Thanksgiving

This is an excerpt from my weekly market outlook post at ElliottWaveTrader.net:

For the week ahead, there is little in the mood pattern in the way of bearishness.  The mood pattern combines a "rose colored glasses" component in which news or data will be seen in the most positive light possible, and a "denial" component which will facilitate brushing off any bad news.  Perhaps people are wanting to keep a hopeful outlook as the holidays approach (U.S. Thanksgiving).

The main take away from the weekly forecast charts (at Elliottwavetrader.net) is that the market continues to be seriously overbought.  The extent of the divergence is beginning to be concerning.  When this "rubber band" snaps, it will not be pretty.

Qualitative Analysis Notes:  This week's identified social mood components: 1) Low Manic/Vulnerable (with inversion) => "Rose colored glasses;" seeing news in a positive light. 2) High Expansive/Controlled (with inversion) => denial, delusion.

  

Keeping Watch on Sunday (August 7, 2016)

Overview
Sunday may be a very important day in the scheme of things, and according to the mood generated forecast, may have a significant impact on the entire week.  One thing to watch for, which will confirm a bearish immediate forecast is evidence of Sunday's Mood/Effect polarity flip.  Every 1-3 weeks, the effect of the current mood pattern inverts, and what was a positive mood brings negative effects.  Sunday should start out very positive or bullish.  At some point there should be a shift to a strong bearish mood.  This may or may not occur before futures open, but would have to occur before markets open for regular trading hours on Monday.
Qualitatively, the mood pattern points to geopolitical issues as a likely focus.  The YTD chart is pointing down through Tuesday (assuming the polarity flip occurs Sunday).


MMI Monday RTH open: down.  MMI Monday close: down (below open).

The Details

I. Stock Market Forecast
Big picture:  Looking for a sharp drop followed by a sharp rally.
Latest forecast info:

SPX	MM Trend Signal	MM Daily Trade Signal	H.P. Trade Signal**
8/8 (open)	UP	DOWN	NONE
8/8	UP	DOWN	NONE
8/9	UP	DOWN	NONE

**Higher Probability SPX trades have a 5-10% higher success rate than standard MMI trade signal, i.e. approximately 65-70% vs. 60-65%.
Today’s action: N/A
Hypothetical next trade: Short SPX MOO¹ Monday.
¹ MOO is market on open.     ² MOC is market on close.
II. Social Mood Pattern Analysis (this bonus section is provided on occasion to assist readers to gain further insight into how analysis is developed)
Themes in search trends for Sunday's mood data: movie, wrongdoing, hero, critic, criticize, image, communication, business, woman, mother, violence, death, police, technology, denial, news
Combined MoodCompass scores: .2N  .4E .8W 1.2SW 1SE .2NW =>  11% NE (Vulnerable)   39% SW (Expansive)   28% SE (Manic)  22% NW (Controlled)
Mood / Effect inversion status: Normal (since 7/31); inverts 8/7..
Qualitative Analysis notes (refer to Mood Qualities Timeline, below):   Sunday: SW high, NE low => strong bullish flips to strong bearish as inversion hits.  NE much lower than other three => watch for geopolitical escalation.  NE lowest => Not conducive to diplomacy or "nice."

Like what you see?  This is a sample post from http://marketmood.net.
Come visit!

The Mood Pattern of Terror

There is an identifiable social mood pattern that is associated with social disruption.  The types of events included in social disruption are protests, strikes, riots, “random” mass violence, and terrorist activity.  An example of this pattern can be seen below in the monthly mood configuration for June.  The basic pattern is high Manic and low Controlled (with mood/effect inverted as it is currently).  When the second highest mood quality is Vulnerable, it ends up being more ideological (e.g. protests and strikes).  When the second highest quality is Expansive, it tends to be more violent.
 

Time scale is important as well.  When this pattern shows up on a daily scale, the events that may arise near that date could be of little significance to the general public and may not even make the news.  On a weekly scale, something in the socially disruptive category is more likely to show up in the news.  On a monthly scale, such as what we have in June, there is almost certainty that a highly significant event or events of this type will be in the news, and will have an emotional impact, at the very least, on the American people (since the measure is U.S. mood).

On June 12th, around 2am, the tragic and unfortunate shooting in Orlando occurred.  One can hope that the largest mass shooting in American history would be sufficient to satisfy a monthly scale disruptive mood configuration.  Yet, while not a certainty, there is an indication that something else may be next.  The exact same social mood pattern for the month of June showed up on a daily scale on June 11th, the day before the Orlando shooting.  It shows up again on June 26th (see June daily mood timeline below).  While a daily scale configuration is not usually of newsworthy significance, when it matches the larger pattern, it may be an indication of specifically when it may show up as part of the news cycle.

This is not being shared to create fear or terror.  It is a reminder to use the due diligence that is always important.  That is, staying aware of our environment and looking for unusual activity or behavior in the people around us, and for anything especially out of place.  This is especially true for the next couple of days.

How does this relate to markets and trading?  There is often (but not always) a climax event at a near term bottom, which also happens to be likely in the next few days.

Update: 6/26/16 3pm Pacific Time 
It's not terrorism, but this certainly fulfills the criteria.  Hopefully with no one dying this time: Protesters, white supremacists clash at State Capitol.  Officials: 5 people stabbed, 2 critically injured

Update: 6/28/16
No such luck.  Terrorism strikes again.
Suicide bombs kills 28, wound dozens at Istanbul airport

MarketMood Weekend: A New Paradigm

The past week has had its fill of sideways, meandering, and confusing moves.  While this may have been frustrating, there is some good news!  The mood pattern over the weekend signals a new paradigm.  This will usually signal the beginning of different market action, a new Elliott Wave subwave, a new focus, and a new news cycle.  Here’s to a new beginning in the new week!

MarketMood Indicator for Monday open: UP.    

Want to know more about what the markets might be up to next?  Go HERE.

Not the Edge of a Cliff, Yet...

If the stock market is going to fall sharply, as some are looking for in the month of May, this isn’t the week it’s likely to happen.  While we may (or may not) be in the midst of an Elliott second wave down, from a sentiment perspective, we are hovering at a strong support line that thus far has refused to give way.  While it’s hypothetically plausible that a large market selloff could happen first, and then people would get really down in the dumps about it, mood almost always precedes market.  Right now the mood says, “No, not going down there yet.”

(click to enlarge)

The chart above shows the MarketMood Indicator daily signal vs. S&P close year to date.  Back in March through early April, the Mood Signal, after some struggle, broke above the 2100 resistance line (see chart).  In late April, the market finally reached this level, but couldn’t maintain a solid break above it.  The Mood Signal in the year to date chart here goes through this weekend (Monday open).  Once again, it’s back to this line, except from above, hovering right at support.

While markets may indeed drop tomorrow, the stock market won’t likely be able to stay dropped for long.  What the market really “wants” is to try to solidly break above that 2100 line and stay there, at least for a bit, if it can.  In order for it to “give up” on that, the Mood Signal will need to solidly break below that same line.  The message for the moment is that the Mood has not done that, and won’t do so through Monday open.

MarketMood Indicator for Friday: close down.

Want to know more about what the markets might be up to next?  Go HERE.

Rising Anxiety in N. America: 17 Dec 2015

As the outlook over the next few days shifts from belief-based and emotional themes to reality and fact-based themes, anxiety and feelings of vulnerability should be on the rise.



More Trouble Ahead? - 16 Nov 2015

It would be great if the bad news was over.  However, the corrective look of the recovery in social mood since the tragic attacks in Paris (see chart below) means that there is likely at least one more big downward move left in mood and market.

(click to enlarge)

 

Social Mood and Stock Market Abnormally MANIC!

Social mood (as well as the stock market) has ups and downs, but arising in the last couple of days, a MANIC spike is concerning.  The chart below shows a normal range of ups and down in social mood factors since August.  The spike showing up is clearly NOT NORMAL.  Manic mood often accompanies instability, protests, and sometimes terrorist activity.  A "crazy" news event of some type is likely.

 

Update: 31 Oct 2015 Russian jet downed by ISIS That definitely is Not Normal and terrorist activity.

 

(click to enlarge)

 

The stock market is clearly overly excited as well.  The daily social mood signal is at resistance and doesn't seem to be able to break through.  The stock market has continued to move higher in spite of the anxiety the public is experiencing. Either people are about to be feeling a whole lot better, or the market is going to hit a wall.

 



(click to enlarge)

Moving onward: Mood and Market Aug 23-29, 2015

There is a growing desire to move beyond the serious mood of the past week as this week moves forward.  However, there may still be some serious news very early in the week as the mood factors from last week (background of violent or volatile news and serious tone) reach their climax.

Market dropped sharply last week, 6.7% from Wednesday through Friday.  As of Saturday, social mood shows that markets are currently 3% oversold.  That is, they are 3% below where social mood would place them.  Markets could be confused as they shift direction early in the week, but a large 3% bounce would not be surprising as the desire to move beyond last week's big losses takes hold.

 

A News Driven Week: Mood & Market Aug 9-15, 2015

 

This week is all about the news (or data), especially news outside of the United States, and building tension surrounding it.  People are feeling generally anxious as the week begins.  There should be a shift around Thursday as the background news becomes more volatile or violent, and people begin to feel more cautious.

 

The way this pattern plays out in the market is not exactly bullish, but is markedly different from the previous week.  There should be a noticeable shift on Thursday from what takes place on Monday through Wednesday.  Whether the "Aversion" taking hold on Thursday manifests as short covering in the stock market or a sell off will depend on how the market does on Monday-Wednesday.

 

Rising Uncertainty: Mood & Market Aug. 2-8, 2015

(click to enlarge)

 

Change is in the air, and uncertainty is rising, according to U.S. collective mood projections for the week of Aug 2.  Expect earlier understandings and assumptions to be challenged, and people to be even more challenging.  A background of international issues are likely to be in the news, and have the attention of U.S. people.

 

Markets could be extra confusing or constricted for much of this week.  Although there is the possibility of a market disruption of some type, overall, it looks like it would probably be a good week for traders to take a vacation.     

The big climax: Market Mood July 27-31, 2015

(click to enlarge)

 

Risk aversion reaches a peak the week of July 27 with a backdrop of violence in the news, according to this week's projected social mood pattern.  Spatial analysis shows risk aversion in the United States to be greater than the previous week, indicating further market losses are likely.  However, the bearish mood will not likely continue past this week, at least in the near term. 

 

A "new paradigm" pattern early in the week indicates that markets could attempt a new direction as early as late Monday.  Thursday and Friday volatility should pick up, and large moves are likely.   

 

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

(click to enlarge)

 

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.

 

U.S. Market & Mood July 6-10, 2015

(click to enlarge)

 



According to social mood projections, Monday should be the most solidly bearish day for the stock market, and the middle of the week, the most clearly bullish or optimistic.  A major shift in the market pattern should take place near the end of the week at the same time that social mood shows increased instability of one type or another is likely to be a focal point of the news.  Spatial analysis shows that the most disruptive events are likely to occur outside of the United States.  Regardless, they should to get America's attention.

U.S. Market & Mood: June 29-July 2, 2015

Risk aversion may peak early in the week.  By midweek, a shift in the pattern shows a new mindset beginning to take hold. Market losses this week are likely going to be greater than last week's.


Social mood shows less willingness to cooperate and an increase in belligerence and willingness to challenge authority.  Tension is likely to lead to a climactic action either during this week or the following one.

Update July 2: Markets were down 1.1% this week.  This is a greater loss than the previous week's 0.5%.




 

U.S. Market and Mood: June 21-27, 2015

Change is in the air as the week begins.  Instability, large moves, and uncertainty are all likely themes (see chart left), especially in the first half of the week.  Tension and anticipation build near the end of the week. 

A large directional move is indicated in the markets this week.  The increasing sense of vulnerability (chart below, right) is most often associated with risk-aversion, decreased spending, and down markets.

U.S. Market and Mood (June 14-20, 2015)

The week begins with an effort to put on a positive, "yes we can" attitude.  There may be some lingering, ongoing economic concerns and domestic issues, but the sense is that they can be addressed and turned around.  Competing with this resolve to look at the bright side, is a background of destabilizing factors, some of which comes from outside the U.S.  People begin to get agitated and anxious as the week goes on.  Midweek could even see a "mild panic" or moment of passion (strong emotions), as a general sense of increasing vulnerability begins to take hold  By week's end, risk aversion is becoming more pronounced, and markets are getting more decidedly bearish.  People have fixed ideas and opinions of "the facts," and are more willing to talk about them.  Protests and demonstrations are on the increase.

Analysis of U.S.-China relations shows China posturing in a more aggressive tone near June 18.

U.S. Market and Mood (June 1-13, 2015)

Social mood patterns for the first week of June indicates anxiety and restlessness.  Markets should be choppy for the most part with little clear direction.  Sometime near the end of the first week or very early in the second week, a directional move should occur.  The most  likely direction is down, as this transitory pattern is most often associated with bearish markets and risk aversion.  Spatial analysis by the MoodCompass team shows economic concerns likely arising from outside the United States having some effect on U.S. markets (see The Crow's Nest blog entry for June).

By midweek the week of June 7 and continuing through the end of the week, a "new paradigm" pattern is in play.  This marks a new chapter in U.S. social mood.  Things should become a lot clearer as to global conditions and market direction as the week plays out.   A shift to this new outlook and new priorities will be in process.  Be ready for something different!

Analysis of U.S. - China relations shows a significant development near June 11.

Global Cluster of Disaster-type Events Underway

As mentioned in previous posts, a global cluster of disaster-type events has begun, and it may be another week before this disaster wave peaks (current data shows it is not even near peak yet).  While the most destructive events should be located outside the United States, the U.S. will not be immune.

Saturday kicked it off with Ohio's forth largest city suddenly finding itself waterless due to toxins found in the drinking water. This has resulted in the governor declaring a state of emergency.  See news story.

On Sunday, over 12,000 homes were destroyed in China due to a large earthquake.  The current death toll is near 400.  See story.

There should be another week or possibly more filled with headlines of death, destruction, disease, and/or toxicity.  This is the measureable shift in consciousness we have already made in collectively turning away from a focus on global violence, aggression, and expansion.  It just hasn't yet all shown up in the news.  Give it a week or two.  We will have a new global focus, new types of collective troubles to worry about.  Perhaps it doesn't have to be this way, but for now, this is what gets our collective attention, and allows us to globally shift gears.



For more info on The MoodCompass Project, see http://moodcompass.com.