Aggressive Frustration: Outlook 27 November '13

after market update: actual S&P +4.5 (+0.25%);  The news is full of disappointments and aggressive tones, as the Iran deal looks shaky, more countries voice their disapproval of China's recent move to create an Air Identification Zone, and then there are more setbacks with Obamacare. Markets were quite confused today, as mood vacillates between todays positive,.and the weeks' overall state of overbought vs. social mood.  Yet, markets ended in the range of today's social mood signals.  The building tension is yet to be resolved.
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Overview: Pressure has been building over the last few days as collective mood has soured, but a collective outlet has not materialized to express this.  Will today be the big release?  Social mood is reflecting confusion, frustration, and aggression.  The risk of violence, protests and civil unrest is high over the next few days.  Themes in the news are reflecting a perception of deterioration, destruction, and/or disaster.  Collective mood signals for the day indicate markets are likely to be up.  Yet, overall market movement during the past week shows a highly overbought market relative to social mood, meaning that anything is possible today.

 

Today's Market Outlook is slightly up to sharply down (signals: +0.2% to +0.5%).  Both the social mood signal and the signal from themes in the news are up for today.  However, the signals over the last few days create an extremely overbought condition relative to what social mood can support.  The projected stock market change for today is shown in the chart below.  It includes the likely range for today from the collective mood signals, as well as the possible sharp downturn from overall weekly movement.

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Near term mood outlook: Social mood is reflecting confusion, frustration, and aggression. The risk of protests and civil unrest is increasing, along with the possibility of terrorist activity.  Themes in the news are reflecting a perception of deterioration, destruction, and/or disaster.  The combined pattern of news and social mood reflects a global perception of uncertainty and deterioration.  

 

Near term market outlook: The social mood signal has broken below primary support (1760) which signals a serious downturn in social mood that is likely to be soon followed by the markets.  

 

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 +4.6 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 +8.3 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.

November 2013 - Growing Economic Uncertainty and Civil Unrest

One of the many benefits of looking at collective mood is that one can get a heads up on prosperous times, and times of more uncertainty and social angst.  The information is perhaps more general than one would desire, but it is still helpful in planning for near future storms or celebrations.

Coming into the month of November is a hopeful United States, and to some extent the world.  Perhaps the worst is behind us?  Perhaps we conquered the problems of the Great Recession after all?  Maybe things are going to really start to get better?

Yet, that is not the picture for November.  Globally, the primary concern is associated with economic issues.  While, as usual, the people of the United States will try to assume that this doesn't apply to them, the U.S. is not exempt from the November turmoil.

The top issues associated with the mood configurations for November: economic uncertainty, bonds and interest rates, new and unexpected problems, denial, fighting, arguing, and protests.  Overall, this is a month of transition.  In the long run, what will matter is how we resolve this transition in December and January.  Do we enter a new global era of prosperity and stability or does cooperation become so elusive that it all starts to unravel?

Likely stock market direction for the month: mixed to down.