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.

Global Agression, Market Correction

This week looks notably bumpy, and worthy of a special public post.  As U.S. society is a part of the global system, U.S. social mood is a subset of the global mood pattern.  There is an abrupt shift (see chart below) in the U.S. pattern showing up sometime tomorrow (Tuesday).  Slight optimism becomes passion and "mild panic" (circled in the chart).  Then by Wednesday there is a sharp deflation of spirit, as the Expansion quality quickly drops below zero, and everyone holds their breath in a tension that lasts through Thursday.  The abruptness indicates that this may show up as something quite intense.  The smallness of it reflected in the U.S. mood, may indicate that the larger effect is happening somewhere else.

In addition to this abrupt shift in mood, the MarketMood weekly model is showing a brief, but possibly sharp, market correction, of up to 2% this week.  Also, the weekly social mood (not shown) shows an aggressive configuration that often goes with geopolitical escalation.  So, hang on, there may be some turbulence.

 

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)

 

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 Very Scary Week: Aug 16-22, 2015

Next week's news stories will be violent and volatile, and the mood in the U.S. extremely serious, according to social mood projections. 

The stock market the week of Aug 16 should see an end of a pattern.  The most likely move is sharply down at least through sometime on Friday.

 

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.

U.S and Global Trends, Remainder of 2014

In January, we published a summary of expectations for 2014.  Using a translation of then available social mood data into cyclical projections for the upcoming year, we filled in the blanks with a best-guess narrative for 2014.  The data showed a large spike in oil/fuel prices in March and April, surrounding an international crisis.  There were indications that the Iran negotiations could run into difficulty.  We put those together in our narrative.  The actual picture was much more complex, with several new situations.  In March and April the Ukrainian crisis was accompanied by an increase in oil/gas prices and volatility of global markets. In fact, on March 2, from our daily data, we were able to announce as imminent, a large international crisis impacting the U.S. only a few hours before news broke about Ukraine and possible Russian involvement.

The global situations continued to unfold.  In June, ISIS was an issue, and the continued stability of Iraq was a concern.  Social mood data continued to lack the signs of full relief and release that would indicate things might settle down for more than a moment.  In our last post (August 7), our conclusion was that these waves of global disasters were not finished.  We stopped posting after that.  What more could we keep saying that would be of any use?  Why continue to drone on with "more disasters to come?"  On September 29, a reader commented, asking for an update.  We decided to oblige.

Looking back at the data we had at the beginning of the year, we can now add to the narrative, as many of the details surrounding context has been filled in (Undoubtedly, there are also new surprises yet to come). 

Our forecast for the stock market (S&P) for the year was near unchanged.  Based on that, in our January presentation we said not to worry about a total market meltdown, and assured the Fed would do what it needed to keep the market at least near unchanged.  At this point, with the market still up about 5% for the year, many different scenarios could result in ending the year with the market near 1850.  One of those would include a sharp drop (crash) and modest recovery.  Another is a large rally followed by a sharp drop.  Another would be a slow meltdown from current levels.  No matter how we get there, the expectation is that we end the year somewhere near 1850.

Health issues came up in our data for the year, but we decided not to emphasize this point.  We mentioned in the summary that it would be a good idea to get rest, exercise, eat healthy, etc.  Six months ago, the data started showing signs of an approaching epidemic affecting the U.S.  As we saw stories of Ebola in West Africa, we were quietly crossing our fingers that this had nothing to do with the U.S. indicators (what could we say, and to who?).  As of a few days ago, Ebola arrived in the U.S.   If the data reflected actual likely U.S. numbers of Ebola cases, this would not be anything like the plague in fatalities, but would definitely cause people to be concerned, possibly changing behaviors in public places.  It is likely that there would be quite a few more cases (more than double digits) before this is over.

Finally, a major turning point was mentioned in the summary occurring shortly before the November elections in the September/October timeframe.  We are in the midst of this now.  During this period, the focus of the U.S. government (and people) shifts from international issues to domestic issues.  There is not a lack of international issues, but a shift of priorities.  Economic concerns should increase,  and possibly other matters of a domestic nature.  Also mentioned in the summary, is that incumbents are not likely to do well in the elections.  These internal issues are the reasons why.  As the year comes to a close, the U.S. may also look more weak or vulnerable to the rest of the world than it has for some time.  This may be due to the issues now beginning to come into focus.

On the positive side, there is a better chance than there has been all year, for diplomatic agreements to be reached in November or December.  It will be seen how this affects dealings with Iran, Russia, and China in the coming months.

Update, 1st Week of August Event, 2014

On 24 July, we announced a disaster or tragic event of high impact to the United States was near and most likely to occur between August 1-8, 2014.  Also, that more information would be available in the days ahead as to the type of event that was anticipated.

The shift in social mood points to a collective desire to shift *away* from global violence as people become concerned with new types of threats.  Some of these new types of concerns, such as disease and economic issues have already begun to surface as Ebola makes headlines and market volatility spikes.  Environmental tragedies and natural events that relate to water or fluid such as severe storms, flooding, a tsunami, or volcanic eruptions (lava) may also be a part of this cluster.

At this time, we can say the following about likely events of this period:
1) The bulk of the destructive components of these events should be international (non-U.S.) in origin.
2) There could be a significant economic component or impact to the U.S.
3) The event or series of events should dominate U.S. conversation and air-wave time for days if not weeks.

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

Stock Market Panic Ahead?

As we await more information about a tragic event that should strongly impact the U.S. any day now (signal indicates most likely timeframe August 1-8, see previous post), the stock market is indicating strong bias toward a sharp sell-off.  In addition, today's social mood is showing a shift toward "panic."  Something big is brewing.  The chart below shows how the stock market has been generally in the same spot for three weeks, while social mood has lead the way steadily down (mood most often leads the market's direction).

 

Time to Panic?

We've been watching the setup develop for months of what has turned out to be a long and painful process, as the world fights to hold on to a sense of growth, expansion, and/or aggression (the alternatives being contraction, depression, and/or despair).  We called the first chapter of "World in Crisis" which we then discovered included the beginnings of the Ukraine crisis, a missing Malaysian airliner,  and a Korean ferry disaster.  Part II of this "World in Crisis" phenomenon saw ISIS take parts of Iraq and Syria, eruption of conflict with Israel/Gaza, further escalation in Ukraine, and another downed Malaysian aircraft with all aboard lost.  Part III is nearing.

There has been a steady negative social mood trend for two weeks.  Intraday movement (volatility) has begun to increase in the stock market, yet markets have managed to stay nearly flat.  Pressure is leaning on the markets for a 3% drop, just to catch up to where social mood has recently deteriorated to. The grand finale we have been watching for in the recent series of world events is not yet here, but as said previously, a drop in the market should be a clear signal that it's getting close.  The next few days could be quite informative.