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.

  

Stock Market at Major Top

You have already decided that the stock market is making a major top now.  Actually, we collectively decided this when we voted about what mattered most to us.  I'm not talking about an election.  Our choices are reflected in what we most searched for on the internet... a few months ago.
Research that spans two decades has shown that daily internet search trends are reflected in the markets a few days later and weekly search trends a few weeks later.  What was important to us on a quarterly scale, well, that will show up a few quarters later.

The source data for the fourth quarter of 2017 comes from internet search trends in the first quarter.  There were many events in the news, including the Inauguration of President Trump.  However, what matters for this purpose is what we focused on the most, not what the news media thought was important.  What we cared about, as judged by our search trends includes Melania Trump, the New Year, the Oscars, the Grammy Awards, St. Patrick's Day, the Spring Equinox, the lunar or Chinese New Year, Alabama vs. Clemson, the discovery of an exoplanet, and the death of Bill Paxton.  While none of this is directly about the market, it reflects cycles of sentiment and social mood, and this is, or soon will be reflected in the markets.

The top trends for the period under review is first converted to themes.  For example, Alabama vs. Clemson can be seen as men, sports, and schools.  After all of our trends are converted to themes they are converted to four primary mood qualities which change over time.  This is shown in the chart below:



When the purple line (Expansive) is on top, and the pink line (Vulnerable) is on the bottom, and the two are moving away from each other, that is bullish.  It reflects the very essence of "bull market."  When these lines start coming back together, it reflects a decline within a bull market.  It is clear from this, that there is a top occurring or about to occur somewhere in Q4 of 2017.

From that point it begins to get complicated.  Every so often the signals "flip," and what was positive becomes negative and vice versa.  One of these should be occurring around Q1 of 2018.  Exactly when this happens will make all the difference in the world.

No matter which way the signal is oriented, Q1 is not likely to be a pleasant period for many.  If it is oriented one way, it points to a background of international issues, people feeling extremely vulnerable or risk averse, and the government trying to prop things up.  If it is oriented the other way, it points to the primary focus being either international issues or the president (or both), a background of victims or people feeling attacked, and things in general appearing to deteriorate.  However, most of the effects of this normal or inverted mood signal in the markets should primarily be seen in Q2.
The charts below illustrate an estimated market track (dashed blue line) using the MarketMood quarterly S&P forecast as a guide.

Base case (signal flip by end of Q4 2017):


Alt case (signal flip after Q1 of 2018):


Needless to say, for the sake of the economic stability and social well-being of our world, I definitely prefer the Base Case.  Even better, that scenario is the most probable one.

At MarketMood.net, we take internet search trends and convert them to daily and weekly forecasts in the stock market, crude oil, gold, and U.S. Dollar   These are presented and discussed in our live trading room.  You are welcome to come check it out!

Heralding Change: August 2017

A stock market rally that won’t stop for anything has been the status quo since February 2016.  There have been geopolitical uncertainties, election surprises, and political confusion, but the market has barely given a shrug to any of it.  The month of August should at least give it pause, and may herald a change of trend that brings the market down… at least for a few months.  Looking within patterns of social mood and translating that into likely market behavior, one can see that August is heralding a message: Something new this way cometh.

Research spanning two decades has shown that what we collectively focus on, as seen in the top internet search trends will show up in market movement and news events soon afterwards.  Daily search trends are shown to be related to market movement three days later, whereas weekly trends are related to market ups and downs about three weeks later, and monthly search trends appear to show up as market movement and often in news events about three months later.

The source data for August’s projections comes from May 2017 top trends.  Imagine taking the mood that accompanies Mother’s Day, the Manchester terrorist attack at an Ariana Grande concert, Chris Cornell’s suicide, and the death of the American TV personality, Christopher Boykin and somehow adding them together.   Other than Mother’s Day, they don’t sound like they would make a pleasant cocktail.  However, it’s not always that straightforward.

In order to combine these, they are first broken down into themes.  Mother’s Day becomes woman, family, honor, and calendar.  The fatal concert becomes woman, music, international, terrorist, explosion, death, and injury.  After breaking the other search terms down into themes, these are translated into an archetypal “language” of 8 words or categories which allows the terms to be added together.  The final results are entered into an algorithm called the MarketMood Indicator (MMI) which gives the expected market change in August from the May source data.

The general mood conveyed by these terms together is one of strong emotions, and often panic.  Yet, there is added complexity for this particular month.  Every so often the mood and its effects become inverted.  This inverted condition has been the case for many months.  It just so happens that in August, this inversion is expected to “flip.”  Before August even began, our analysis showed that at some point during the month, an overall social mood of denial in spite of facts (this is the flip expression of the panic pattern), should flip to something much more intense.  This would make it a month where people who have been in denial about a problem are suddenly faced with it loudly, brightly, and undeniably.  If this flip is more gradual throughout the month, both large short covering rallies and sharp sell offs are possible as buyers and sellers deal with a background of strong, shifting emotions.

To see how the August mood is distributed geographically in the U.S., see our latest United States MoodMap, Is August Panic Time for the United States?

The chart below is the output of the monthly stock market MMI.  The mood generated forecast line which has been in a steady climb since early 2016, can be seen at the right of the chart to be doing something different than it has been for so long.  While the stock market may take a slightly different shape from what is shown here, we can now observe a July-September "double top" in sentiment followed by an October “lower low.”  This is the first lower low to show up in the entirety of this monthly chart which goes back to March 2016.  The month of August 2017 should bring the initial jolts that allow such a long, powerful, and steady uptrend to pause and decline, at least for a few months.


Chart: Monthly MarketMood Indicator vs S&P 500.

The month of August is likely to be unusually full of emotional ups and downs. There have been many news stories of late that can be considered irrational, but this month may mark unexpected new extremes.   The mood pattern for the month of August taken as a whole, suggests a theme of strong emotions, irrational decisions, delusion, and even panic.  The stock market should reflect this background context, and make linear, “rational” or fundamentals based trading nearly impossible to succeed at—in other words, the market movements may make little sense to any reasonable person.  Most importantly, August is heralding a change from the status quo.  While it may not mark the final top of this long rally, as has already been seen after the first week and a half, it should be a jolt to the market, and wake up the sleeping VIX, at least for a moment.

However, just when everyone is assured that things are as bad as they can get, people may be surprised to learn that it’s not the end of the world after all.  Recall the market forecast chart above.  When August’s emotional roller coaster has finished its task, the market will rise again, and the VIX will fall.  This stubborn bull market will not roll over and die without a heck of a fight, and from the mood generated forecast chart, it doesn’t appear quite ready to stop fighting.

At MarketMood.net, daily search trends are converted to expectations of market movement in the S&P 500, gold, crude oil, and the U.S. dollar.  We issue daily and weekly reports, and discuss trade possibilities in our live trading room.

Is August Panic Time for the United States?

According to the pattern of top internet search trends in the United States, August 2017 may be “Panic Time.”  Over ten years of research shows that there is a direct and quantifiable relationship between social mood and the movement of stock and commodities markets in the near future.  Further, information from top search trends can be extracted to give us a “snapshot” of the types of news events and general societal mood to expect at a near future period (as well as market information).  The overall “mood” conveyed by news events and markets in the United States in the month of August could be quite intense and is likely to reflect irrational decisions, strong emotions, and possibly, at times, even panic.   The apparent stimulus for this emotional month may be events taking place outside of the U.S. or situations within the country.

To look at how different areas of the United States are doing relative to each other, we analyzed search trends from around the country geographically.  The map below gives us a picture of the anticipated distribution of mood patterns for the month of August.  The Northwestern U.S. is highlighted as more “emotional” than the rest of the country.  There’s an uncertain something shown off the South Florida coast (or related to Cuba?).  We’ll have to wait and see if this corresponds to anything.  The most significant mood configuration appears to be the area marked as “disruptive” in the Northeastern U.S.  This pattern can reflect social upheaval (unrest, protests, etc).  However, it also shows up in connection with an increase in terrorist activity.  With the center of this area being near NYC, it could also imply market disruption.

 

This map is not a map of future certainties.  It is a map that shows regions more prone to crises, or at higher risk for “newsworthy” events during the month of August than a "background normal."   Similar to the technology that converts internet trends to “future maps,” daily hot search trends are converted to expected changes in the stock market, crude oil, gold, and the U.S. dollar at MarketMood.net.  We publish daily and weekly forecasts, and discuss trade ideas in our live trading room.  A 15 day free trial is available to check us out.  Hope to see you there!

An Emotional Roller Coaster: April 1-7, 2017

What an interesting week in store for us!  A week where emotions rule-- irrelevant facts and reason are on the back burner;  fear, passion, hope and faith are in the driver’s set.   How do we know this?  Because you Googled it!

For over a decade of doing research connecting changes in social mood with events in the world and changes in the markets, it’s been found that the “mood” of what we collectively pay attention to on a daily basis shows up in some form a few days later.  Likewise, on a weekly basis, the mood reflected in what we are searching for most on the internet, shows up a few weeks later.  From this foundation, we can get a glimpse of the ambiance of the week ahead, the types of news stories, and what to expect in the markets, all from what we were looking at most intently a few weeks ago.
To start with, we can get a lot of information just from the top two trends from this week’s source data.  They are “Holi Festival” and “St. Patrick’s Day.”  The first is a Hindu festival that reflects the conquest of good over evil and the healing power of love.  The second is named for a Catholic saint, and is in effect a celebration of Ireland and Irish culture.  They both have religious roots and they both originate or are about places outside of the United States.  They both reflect a sense of community and celebration.  Interesting!

On the face of it, it would seem to be a fairly upbeat week.  A week of hope and celebration.  Yet it’s not that simple.  Perhaps to keep us on our toes, every so often the source mood and the effect we see a few weeks later “flips.”  What may have been fear becomes hope; what may have been optimism shows up as anxiety.  It just so happens that this coming week is a flip week.  Sometime during the week ahead, this “flip” should come about.  That is when the emotional roller coaster should really kick in!

To further analyze our mood data for the week, we break the search trends down into themes and then translate that into what we call the four primary mood qualities: Vulnerable, Expansive, Manic, and Controlled.  For example, the themes I came up with for these two top search trends are religion, international, activity, love, green, and celebration.  The picture below illustrates how that looks as a “MoodCompass” of the four primary mood qualities:



You can see that Expansive and Controlled on the left or “West” side of this picture are much bigger than Vulnerable and Manic on the right or “East” side.  This is made even clearer by the inner circle.  The blue part shows the total of the two West mood qualities which are associated with emotions or the non-rational.  The yellow part shows the total of the two East mood qualities which are associated with facts, data and reason.  When comparing the blue part of the inner circle with the yellow part, it’s easy to see that this week is ruled by emotions (e.g. passion, fear, hope and belief), and that reason (e.g. facts, data, objectivity) will not be the primary driver of decisions or behavior.

So, it’s likely to be an intense week, and it’s likely to be full of emotional ups as well as downs.  We can look forward to irrationality starring in the news, for events and actions to make less “sense” than usual, and for markets to participate with ambiguity and possibly large swings in either direction as traders try to make sense of an especially irrational moment.

At MarketMood.net, we explore this information further by translating the four mood qualities into expected point changes in the stock market, crude oil, gold, and the U.S. Dollar on a daily basis, and discuss this in our live traders’ room.  You’re welcome to come check it out!

Tomorrow's Stock Market from Today's Search Trends (video)

How do you take today's internet search trends and translate that into stock market changes 3 days ahead of time?  Here's Dr. Cari Bourette's explanation given at the NY Traders Expo 2017 (following an introduction of sentiment based trading by Elliott Wave Trader's Avi Gilbert).

 

Tea Leaves

This post was written by a good friend and philosopher, Daniel Reader when I was still at the MarketMood.net site.

Those of us that frequent these pages understand that the news doesn’t drive market prices – or anything else, for that matter.  The news is driven by…something else.  The same may be said for market fluctuations.  The market is not the driver of anything – instead, market movement is the result of something else.  What that Something Else actually is turns out to be the subject of much philosophical debate.  Beyond identifying it, finding that thing, or force, is just as esoterically challenging, and has most frankly been the purview of religion over the centuries.  But what if that thing, that Force, actually left tracks in the sand, or resonated with some audible, measurable pulse?  And even more magically, what if those tracks pointed to a future condition merely days away?  Now, that would be useful information!  We have but to find the signal, and figure out how to interpret it, and a window into next week opens before us.  This is precisely what Market Mood purports to do.

While making no claim at all about the Force behind the phenomenon, Market Mood has identified a signal, or indicator, that seems to be just such a pulse.  Dr. Cari Bourette tracks the interests of the United States by watching the things that Americans are watching.  She charts the Google search trends of hundreds of millions of people on a daily basis, getting numbers for just what is juicing people today -- and a fascinating pattern emerges.  The arcane charts of squiggly lines she delivers seem opaque at best, but what emerges is a complex dance of emotional drivers – moods – that seem to match real-world events days, and even weeks or months in advance, with extraordinary accuracy.  Think about that.  What Dr. Cari is doing is taking the pulse of the world, and using that to tell us what will happen in the future.  This is nothing short of miraculous.

The philosophical implications of this are simply staggering, and will be explored at greater length in future articles.  But what is important for us to understand now, is that we have available through MarketMood.net a reliable market indicator that does not use market performance as its basis.  In this sense, it is unique, and revolutionary.  Dr. Cari provides us with actionable market information that is in no way derived from market conditions, or performance, of any kind.  No other system or method, black box or otherwise can make this claim.  Among all of the implications of this claim is the certainty that no past assumptions, rules, patterns, or any other investment governance plays any role whatsoever in the delivery or interpretation of the market guidance.  Indeed, Dr. Cari’s goal is not to provide investment advice at all – simply to tell you which way the market is likely to move, and let you determine your own trading strategy accordingly.  This is refreshingly straightforward, and should pique the interest of novices and seasoned investors alike.  Remarkable!

A New Geopolitical Chapter: Feb 11-17, 2017

This week, a new chapter, or new paradigm begins.  Why do I say that?  In the research I’ve done following the relationships between changes in social mood, the markets, and the news, I’ve found that the patterns found in the things we pay attention (i.e. top internet search trends) to on a daily basis show up in the markets and news stories about three days later.  When one looks at the patterns in the top weekly search trends they show up in the markets and types of news stories about three weeks later.

The top search trends 3 weeks ago included Melania Trump and Chinese New Year.  It was week number one of the Trump administration.  It was also the beginning of the Year of the Fire Rooster.  In the analysis of the pattern for this week two primary things show up.  First, it’s a pattern of a “new paradigm.”  We’re about to turn the page into our next collective “chapter.” This should show up as a change in the news cycle.  There could be a new focus or new tone in what’s being reported.   In the markets this should appear as new market behavior and/or a new direction.   Second, there is a rise in the “vulnerability factor.”  In the news, people may seem a bit more reserved or anxious.   In the markets, this should appear as increased risk aversion.  Finally, the mood pattern over the next few weeks shows that there’s a good chance that this new chapter will include increased attention on geopolitics and foreign affairs.



Above is a picture of this week’s internet search trends converted to four primary mood qualities.  At MarketMood.net this is further converted to expected changes in stock market points and commodity prices, and discussed in our member trading room.

It’s a new day, a new week, and a new chapter.  May yours be a good one!

An Emotional Week! Feb 4-10, 2017

The world has been struggling to adjust to the unique style of the new Chief Executive of the United States.  With all the turmoil observed and experienced in the U.S. over the last couple of weeks, it’s difficult to imagine that the coming week could be set apart as “An Emotional Week.”  Yet, apparently that is just what we are about to get!

For whatever reason, those things that we collectively focus on (as seen in the top internet search trends) show up in kind a short time later.  This can be seen in the types of stories that occur in the news, in the stock market, and in the general ambience of our lives.  When we look at those things that held our focus on a weekly basis, we get a good clue about the general mood and market behavior that are likely to show up three weeks later.

While our dataset has over 20 top internet search trends each week, just looking at the top few gives us a good bit of information.  The top three search trends that relate to the coming week are Inauguration, Martin Luther King Jr. Day, and the Dallas Cowboys.  To be able to combine these into a meaningful picture of our week, we first break them down into the themes these terms contain.  For this week:  President, ritual, new era, man, nostalgia, prejudice, tolerance, killed, sports, loser.  While an interesting combination of themes, it’s not yet clear why that leads to an “emotional week.”
The next step is to translate this into four primary mood qualities.  Graphically, this is what we end up with:

The side of this graph on the left, the “West” side , is related to emotions and the non-rational.  With “Expansive” slightly greater than “Controlled,” this is associated with passion, panic, and irrational decision making.  In the markets, a volatile week is likely.  It will be interesting to see how this week will be able to stand out from the last few in regards to “passion, panic, and irrational decision making.”   Also, with this in mind, I will do all that I can to be aware of that in myself, and take some deep breaths and a moment of thought before making any important decisions!

In our members’ trading room at MarketMood.net, besides a daily analysis of the social mood, we translate internet search trends into market forecasts for the coming days and weeks for the stock market, crude oil, gold, and the U.S. Dollar.  In this way, emotional weeks such as this one just ahead, does not have to be a liability!

Freaking Out ‘N Moving On: Jan 21-27 2017

There’s a new U.S. President in town.  Some people are excited, and some are really quite upset.  A great tension has built up since Election Day surrounding the beginning of Donald Trump’s term.  This build up of foreboding and impending doom even showed up in the weekly top internet search trends that we track and analyze, and was discussed in last week’s post.  This tension is about to be released.

The chart below shows the ups and downs of the four primary mood qualities that all search trends are converted to in our analysis (for whatever reason, what we collectively focus on, i.e. the search trends, shows up in the news, the markets, and general ambience about three weeks later).  The gray line (Controlled) goes steadily up from early November to Inauguration Day and then drops off sharply over the next two weeks.  That sharp drop and its reverberations should be visible this week in the news cycle, in the stock and commodities markets, and the overall mood.



Another part of the analysis is identifying the patterns that show up.  Two have been identified for this week.  First there is a pattern that is associated with high emotions, passion, and panic which began last week and completes this week.  The second is a pattern which is directional, forward moving, and generally optimistic.  This begins sometime this coming week and continues into the following week.

In our members’ trading room at MarketMood.net we also translate these patterns into market forecasts for the coming days and weeks.  Undoubtedly, the coming week should be topsy turvy and highly volatile as one pattern completes and the other begins.  Hang on to your hats!

End of the World as we know it: Jan 14-20, 2017

The Obama administration is coming to an end.  While some may be celebrating, for others it might as well be the end of the world.  In tracking the weekly changes in social mood, I've noticed a slow and steady increase in a somber and foreboding mood quality since the U.S. presidential election.  The good news is that it reaches a peak in the coming week, and then drops off sharply.  The bad news is that it reaches a peak in the coming week.

For whatever reason, the things we focus on as a society show up in the stock market, in the news, and in the general ambience of our lives shortly after.  We know this because the hottest daily internet search trends contain information about what the markets are going to do, and the types of news stories that could come up about three days later.  When we look at the mood qualities found in the search trends on a weekly basis, these qualities show up in the markets, the news, and in general, about three weeks later.

I find it fascinating that as we come upon this ending of a way of being in America, and how America conducts itself, that the data I'm looking at for this week of endings is the last week of 2016-- another ending.  There was a lot of loss in that week.  The biggest search trends focused on two amazing women, Carrie Fisher and Debbie Reynolds, a famous mother and daughter who both died only a few days apart.  Other public figures lost that week, which were also among the top trends, were George Michael and Ricky Harris.

It makes sense that if all that went on that last week of 2016, which in kind is to somehow become a part of this last week of the Obama presidency, that this would be a time for grief and trepidation.  Yet, as uncertain as it is, the "New Year" comes and we adjust to what is.  This chart (below) shows the four mood qualities that I track.  If you look at that gray line (Controlled) that steadily and unusually rises since early November, you will see that it sharply drops after this week.  That represents this extremely serious and foreboding mood ever increasing from election day through Inauguration day.  Another interesting thing about this coming week is the overlay of the purple line (Expansive) and the gray line (Controlled).  This is associated with strong emotions, irrational behavior, and panic responses.



With all the uncertainties in getting a new president, especially this one, it's not surprising to see this about next week.  It's fascinating that this information came from events we Googled about three weeks ago.  It may also not be surprising that markets could be quite sensitive and make large swings in either direction (panic responses) with little stimulus in this last week of a somewhat known quantity.  This is a week when "fear itself" may be the greatest adversary to stability.  We will be closely watching the daily signals in our member trading room at MarketMood.net.

When I find myself experiencing this dread of the unknowable and unpredictable dawn of Orange America, I remind myself that I don't need to get wrapped up in it.  What is happening is; and even if it's the end of an era, or the end of a world, I can remind myself of the detached wisdom of R.E.M.: "It's the end of the world as we know it, and I feel fine."

Who's Afraid of the New Year?: Dec. 31, '16 - Jan. 6 '17

I can't tell you how your year is going to go, or mine for that matter.  Yet, for whatever reason, the top things we focused on a few weeks ago, the top internet search trends, are related to what's coming in the news, the markets, and even our own lives in the week just around the corner-- the week of the New Year!

The bringing in of the New Year is a time of hope and celebration.  Surely, it has to be better than the year we just had!  I'll leave it to others to compare the years, but we can get a glimpse at what might be different about the coming week from the week we just had.  In general, there should be a lot that's very similar to last week, but the part that's different, well, "Happy" may not be it for this New Year.
As I write this, I am still feeling the impact of more famous people of 2016 that we've lost this week (which is yet to be somehow woven into the events of a few weeks from now).  I am left wondering if as a society, we are in the midst of some kind of positive feedback loop. I feel obliged to give a warning, before you read further, that while this is based on research that is backed up with data and repeatable results, it may be a bit too different from current assumptions about how things work to be comfortable for some to consider.  If you must stop reading now, ranting about how this is all B.S, or other choice words, it would be understandable.

The top trends from the period reflected in the week beginning New Year's Eve and going through Friday January 6, 2017 have some similarities to those from the week before (see Forced Optimism: Dec. 24-30, 2016).  Just like last week, several of the trends reflect a strong masculine quality.  Dallas Cowboys, Lamar Jackson, Army Navy 2016, and the Patriots are all related to men's sports, specifically football.  In the trends pertaining to last week, there was also a male hero who died, John Glenn.  That goes up to two well known men who died this time-- Alan Thicke, best known as the father on Growing Pains, and Craig Sager, a sports reporter.  Similar to those for last week, the remaining three trends are related to entertainment.  Rogue One Trailer, the Star Wars spinoff movie, gives us a space adventure with a bit of nostalgia.  The Voice, a singing competition TV show, many find fun to watch.  The third one, Flip or Flop, has a twist to it.  This show about house flipping made it to the top trends because the couple hosting it is getting a divorce.

It's the difference between these two weeks that stands out to me.  An increase in themes about well known men who died and a focus on a break up instead of the show itself.  Just this alone, does not imply to me, a cheery way to start the New Year.  Let's look at it a bit more scientifically using the MoodCompass method, and see if that gives us a different picture.

First, the nine trends are broken down into themes: man, family, nostalgia, death, sports, loser, adventure, trophy, military, school, home, relationship, divorce, TV, music, winner, and reporter.  These are scored, and those scores are "normalized."  The result gives us relative amounts of four mood qualities¹: 14% Vulnerable, 38% Expansive 13% Manic and 36% Controlled.  In graphic form it looks like this:



There are two primary patterns I see in this.  1) A change in "optimism."  The previous week's optimistic High Expansive/Low Vulnerable pattern gives way as Manic becomes the low point.  Optimism, the "Happy" part of Happy New Year, appears to be losing its edge.  2) High emotions, especially fear or even panic is reflected in the High Expansive-Controlled pattern.  Putting these two patterns together, reaffirms my suspicion of a less than happy New Year's week in the news, in the markets, and in the overall ambience of many of our lives.

While societies have little choice as a whole, as individuals we have an array of responses and coping methods.  This is a heads up as to what the overall trend is for one week. It's not a week to expect people to be their most reasonable or rational selves.  Yet, it's certainly no reason to give up on a personal commitment to having a Happy New Year.  With this awareness of the general trend of the week, I will make an added effort to be around people that give me smiles and a sense of safety and well-being, and will commit to doing my best to keep my own head on straight.  Perhaps you can come up with ways to bring in the very best New Year for you.

At MarketMood.net, we also convert this information into expected market behavior for the week.  This particular week of emotional transition will have a different effect on the stock market, crude oil, the U.S. dollar, and gold.  We explore that in our member trading room. 

Forced Optimism: Dec 24-30, 2016

I can’t say what anyone in particular will be feeling next week, or how your particular family may get along or not for the holidays.  However, in general, the social mood for the Christmas weekend through the end of the week is not the best for the coziest of holiday gatherings.  I know this from looking at a few internet search trends, the ones we all said mattered most to us a couple of weeks ago.  For whatever reason, what we focused on a few weeks ago, is what shows up in the news, the markets, and our personal lives in the week just around the corner.

The internet search trends that give us a peek into the social mood for the week of Saturday December 24^th through Friday the 30^th are really strong in “masculine” heavy items.  Three out of the top seven are football teams (Pennsylvania State, Raiders, and Dallas Cowboys).  Add to that a legendary man, space explorer and hero, John Glenn.  The remaining three are performance and art related.  There’s Hairspray live, the musical; Fantastic Beasts and Where to Find them, a movie primarily for children; and the Victoria Secret Fashion Show, primarily for grown-ups.

Extracting the major themes contained in the seven search terms we found: men, sports, winner, loser, school, music, live, hero, nostalgia, death, movie, children, model, and show.   These themes are scored, and after those scores are added and “normalized” what we end up with is relative levels of four primary mood qualities.  For this week, 13% Vulnerable, 50% Expansive, 16% Manic, and 21% Controlled.  In graphic form it looks like this:

 

To get to the “not the coziest” conclusion, requires analysis of the relationship of these four mood qualities.  This is what I see in this week’s social mood configuration: 1) High Expansive/low Vulnerable is associated with optimism, and with heading in a direction or specific way forward.  2) Expansive/Controlled being the two highest goes with high emotions, passion, and/or panic.  3) Expansive high and the other three much lower is associated with “bravado” or putting on a show of competence, leadership, optimism, etc.   In other words, “forced optimism.”  While #1 could add a bit of jolliness to a party or gathering, in combination with #2 and #3, this same component could look like arrogance, stubbornness, or strong opinions.  If your group has a good “diplomat” (a trait of "Vulnerable" which is needed to balance "Expansive") things may go fine.  If not, don’t be surprised to see some head butting.

The way this mood pattern might show up in the week’s news events would be a focus on geopolitical or presidential “chest pounding,” some passionate responses or panicky behavior or expressions, and a sense of show or overdoing it.  With “Vulnerable” low, it’s not going to be a good week for diplomacy in general.

One thing further we do at MarketMood, is translate each of these mood components into stock market behavior.  For this Christmas holiday week, here’s what we might expect the market to do with those same three mood components: 1) a directional push, likely bullish, 2) a bearish drop, and 3) an exhausted market’s attempt at remaining bullish.  Our algorithm would add these three together to get a likely overall direction.

So, if you can’t find a cozy space for the holiday week, perhaps you'll experience a jolly one.  If not that, it’s certainly a good time to put on a smile and just get through it.

MM Presidential Indicator Wins!

This may seem like old news, but it's a win today for the MM Indicator...

Because the MM Electability Indicator is 5 days lagging the social mood data, we developed the Campaign Momentum Indicator to try to get around this (i.e. the momentum of the Electability Indicator).  It was found that using an adaptation of Elliott Wave analysis, it was possible to make an educated guess about what was coming next in momentum, as the changes in the CMI seemed to follow clear Elliott Wave patterns.  This worked well for the debates.  A few weeks prior to the election it looked like a 3rd wave was about to take place.  However, we gave this caveat:  "If this is a correct assessment, this would mean that there should not be a last minute bounce for Trump nor a last minute fall for Clinton.  These would be impulsive structures, and the campaigns would be both at juggernaut momentum in their respective directions coming into the close."

Shortly after this, the Comey FBI announcement came out which dramatically altered the Clinton campaign momentum.  This gave us pause, but we waited until the day of the election to give a final call.  At that point, a clear 3rd wave could not be seen, but there was still a good chance that one was "trying to."  We gave Clinton a 60-75% chance of winning at that point, and had to admit that it was much less a sure thing, as the wave pattern no longer looked like a clear impulsive Clinton wave.  Also, competing with the CMI, was that the Electability Indicator was clearly showing Trump as "trying" to have an impulsive 3rd wave up (1-2 i-ii in place).

Today's social mood data, due to the lag in the Electability Indicator, brings us to Nov. 8th.  The final results give Clinton a 33.0% and Trump a 32.7% in a national election (see below).  While this does not take the electoral college into account, this is a great reflection of the close race and Clinton narrowly winning the popular vote.  It also shows how timing is everything.  A few weeks prior, Trump would have won in a landslide.  Just a few days later, we might now have a president Clinton.

Calling the Presidential Election

The social mood signals we use give us information about the markets several days ahead.  We've developed a polling indicator, and while tracking well, gives info that is about a week old.  We found a way around this impediment buy using the momentum of projected polling changes.  By combining the Campaign Momentum Indicator and an adaptation of Elliott Wave analysis we were able to obtain useful information before the 1st and 2nd presidential debates (we abstained from the 3rd).  Today is election day, and while leaning in a direction, we have to admit that the alternative has not been ruled out.

The base case outlook is that Trump is in a 3rd wave down and Clinton in a 3rd wave up, and that each is about to experience a 3rd of a 3rd in their particular direction.  For those not familiar with Elliott Waves, this means a really big blast in that direction-- the grand finale.  However, the way this has played out has left it somewhat ambiguous, and leaves a less probable, but not unlikely possibility that Trump has completed a c wave and beginning a new uptrend, and Clinton would be in a similar situation (not shown on chart).  It looks cleaner (to me) with the 1-2 i-ii count, ready to blast into a 3rd of 3rd.  However, I won't know for another week how this chart actually played out for election day.

Final call: Clinton winning is most probable, but not clear cut certain.

2nd Presidential Debate: Trump's Comeback?

The first debate was easy to call.  We were able to use our Campaign Momentum Indicator and an adaptation of Elliott Wave analysis to see that the debate would mark a peak for Trump and a low for Hillary.  Since that day, the Trump campaign has taken a dive, and Clinton has had a relatively easy time of it.

For this debate, there is no easily identifiable Elliott Wave "abc" pattern to tell us the next move in each candidate's campaign momentum.  Without that available, we will simply have to look at the current momentum reading and infer what that might imply about tonight's debate.  Hopefully, by the 3rd debate, and especially by the election a clearer pattern will be emerging.

While the last couple of weeks has been quite bad for Trump, the CMI shows at least a pause of this decline, and even perhaps a mild rebound.  The indication would be that he should do better than expected in this debate, and possibly make some people reconsider supporting him who had been turned off of late.  Clinton's campaign momentum is near zero.  The expectation is for her to hold her own and not really change many minds for or against her.

Social Mood Clues to Monday's Debate

For several weeks now, we've been looking at the idea of Presidential Campaign technical analysis using a social mood derived Campaign Momentum Indicator and an adaptation of Elliott Wave analysis.  Our last prediction was that Trump would see a gain in the polls and Clinton a drop (which we have been seeing).  Both campaigns have been following a "corrective" structure of some type, and this most recent "c" wave or 5 wave move in each campaign should signal a completion of that direction.

What this means is that Trump is likely at a peak in gaining poll points and Clinton at a low in losing poll points.  If this is the case, then it would make sense for Clinton to win the upcoming debate on Monday in the eyes of most voters. However, because we haven't yet seen evidence that either of these "c waves" have climaxed (i.e. begin to turn in the other direction), the debate may be Trump's final triumph, and Hillary's last big stumble just before things turn around.  Let's see what happens.

Presidential Pins and Needles

I've been discussing "Presidential Technical Analysis" over the past few weeks, and we've been combining a social mood derived Campaign Momentum Indicator and an adaptation of Elliott Wave Analysis.  I've been doing a weekly update on this on Sundays, but this just can't wait!
As of the last post, we were wondering whether Trump was experiencing a corrective increase in momentum (as informed by social mood data), or whether his new uptrend would be impulsive and give him an almost guaranteed victory.  It looks pretty clear at this point, that this uptrend is corrective, and will not yield a default victory crown.

However, the surprising new development is what is going on with the Clinton campaign trajectory (see chart below).  We expected her to have a tough week or two with a sharp "c wave" drop coming up for her.  Yet, the rebound from that sharp drop is only three waves so far.   A critical moment is just ahead!  Either she will get one more upward move soon, giving her five waves up and a new surge in momentum, or her entire campaign is about to "crash" in what would be a devastating not yet completed c wave down that could last well into October.  It wouldn't be impossible, but it would be nearly so, to recover from such a devastating blow in time for a win in November.
Stay tuned!

MarketMood, Elliott Waves, and the Election

Last week I introduced a Presidential Campaign Momentum chart (link).  One thing that came from the discussion was a recognition of Elliott Wave patterns in this social mood derived chart.  A "b wave top" was spotted for the trajectory of Clinton's campaign and a "c wave low" for Trump.  From this labeling (shown below) we expected the next wave for Clinton to be 5 waves down.  For Trump, an up move was expected next with possibly the entire election hinging on whether the next wave set for him is a 3 wave corrective move up or a 5 wave impulsive one.  A 5 wave move up for Trump would be just the beginning of a new strong surge in the polls.

It is fascinating that we were able to call the direction of the next wave set using this combination of Elliott Waves and the MarketMood social mood data.  You have the exclusive information here that the entire presidential election could very well rest on the next week or two.  That is, not what the candidates do or say in the next week or two, but what the pattern is in the social mood data.
Looking at our momentum chart, Clinton has 3 waves down so far, and Trump 3 waves up.  They are both on a possible wave 4.  The sharp drop for Clinton does appear right for a 5 wave drop.  Today's health news could end up being a part of the 5th wave.  Trump's rally so far has more of a corrective look to it, but we will have to wait a few more days to clearly see if he is working on a 5th wave up, or beginning another 3 wave drop down.