Scrambling, Arguing, and Blaming: Outlook 16 Oct. '13

after market update: actual S&P +23.4 (+1.4%); Markets soared as time came for the debt deal to be made and the crisis resolved.  That's when the blame game started.  Even with the deal, or perhaps because of it, Republicans are in trouble.  The high divergence between the timid collective mood signals and the action in the stock market will bear close watching over the next few days.  The relief seen in Wall Street does not appear to translate to the general public or world at large.  Here are some of the headlines coming in on the blame game theme, and frustration at the further arguing ahead:

The right's angry response to the House GOP's collapse

Boehner caves

Relief to be short in emerging debt deal

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Overview:  A U.S. government shutdown is in day 16, and participants should continue to be aggressively and desperately pushing their side's agendas.  The mood depicted by themes in the news is uncertainty, confusion, mania and the perception of "bad news"  Markets may be confused, jostled by every rumor and hope, but the overall outlook is down.

Today's Market Outlook is Confused, and Down (-0.1% to -0.4%).  At the time of this posting, both the social mood signal and the signal from the news are negative.  If the market turns down, the overbought condition of the market (relative to collective mood) may result in a sharper drop than indicated by the models.
 

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

 

Near term market outlook: Social mood is hovering near support (see chart below).  A serious breakdown in the markets may begin at any time.

 

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

 

Today’s social mood signal is -5.1 S&P points.  Markets tend to follow social mood more often than not. 

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Today’s news signal is -1.9 S&P points.  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. 

Aggressive Surge Impacting Shutdown Talks: Preliminary Outlook for Monday

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

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

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

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Note: data for U.S. social mood are scores in eight MoodCompass categories of Google Hot Trends, data for news are scores of top Google U.S. news stories.

Shutdown-- Trying not to Look Bad, Markets Still Down: Outlook 8 Oct. '13

after market update: actual S&P -20.6 (-1.23%); Markets just went down today.  The president's speech on the government shut down didn't slow it down, and perhaps made it worse. 

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Overview:  A U.S. government shutdown is in day 8, and participants are concerned with damage control to image and political capital.  Social mood reflects both a desperate aggression and an unwillingness to appear weak or vulnerable.  The mood depicted by themes in the news is uncertainty, confusion, and an effort not to be seen as irrational or delusional.  The stock market appears to be heading toward the 1630 support line.  It may or may not get all the way there today.

Today's Market Outlook is Near unchanged to down  (-0.1% to -0.5%).  At the time of this posting, the social mood signal is negative, and the signal from the news is slightly negative.   
 

Near term mood outlook: The social mood pattern corresponds with desperate aggression and a refusal to appear weak or vulnerable in any way.  Common themes associated with the mood pattern found in the news are mania, uncertainty, protests, terrorist activity, and an effort not to be seen as irrational or delusional.  The combined pattern, at times, accompanies global themes of violence, instability, and terrorist activity.

 

Near term market outlook: The social mood signal has clearly broken below support,  Markets should be close behind.  The social mood signal appears not to have gone below the 1630 support line of the S&P. 

 

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

 

Today’s social mood signal is -8.2 S&P points.  Markets tend to follow social mood more often than not.  Signal has clearly broken below support. Markets should soon follow with a sharp break down.

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Today’s news signal is -1.4 S&P points.  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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Model inputs and outputs: Today's expected stock market range is from the Market Mood Model outputs of -1.4 S&P points (news signal) to -8.2 S&P points (social mood signal), or -0.1% to -0.5%.

 

MoodCompass Social Mood score input: NE 17.3  SW 39.9  SE 22.5  NW 20.4

MoodCompass News score input: NE 23.2  SW 25.1  SE 31.4  NW 20.2

 

Social Mood scores from these Google Hot Trends: Raiders, Scarlett Johansson, Detroit Tigers, Red Sox, and President's Cup streaker

 

News scores from U.S. news stories on: Brown vetoes bill to allow non-citizens on juries, Senate Leaders Mull Raising Debt Ceiling in Challenge to House, Steubenville rape case: New arrest, jail without bond, Charges Expected in Wash. Soldier's Fatal Stabbing, and Fast-moving storms bring heavy rain, high winds to Northeast, delaying flights

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

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

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

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

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

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

 

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

 

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

 

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

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Today’s news signal is -1.9 S&P points (-5.2 S&P points the entire weekend Saturday through Monday).  News tends to follow the general trend of the market, but on a daily basis, can either lead or lag the movement of the market.    

 

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

Over the Edge of the Cliff: Outlook 4 Oct '13

after market update: actual S&P +11.8 (+0.7%); Markets climbed steadily today, even with no apparent progress on the shutdown.  However, unless social mood rises from its current position, a 4% drop in the S&P in the next few days is the most likely outcome.  Why that happens, whether from the shutdown or some other named reason, is yet to be seen. 

End of day update: News story reflecting today's social mood of angry and exasperated-- With No New Plan, Boehner Makes Angry Plea on Shutdown
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Overview:  A U.S. government shutdown is in day 4, and people are getting angry and exasperated.  Social mood reflects both aggression and desperation.  The mood depicted by themes in the news is uncertainty, confusion, and attempting to avoid appearing irrational or delusional.  Markets are expected to drop about 4% in the next few days.  This may or may not occur today.

Today's Market Outlook is Near unchanged to down sharply (0% to -0.4% or greater).  At the time of this posting, the social mood signal is negative, and the signal from the news is barely negative.  Markets are expected to drop about 4% in the next few days.  This may or may not occur today.  A major influence on today's outlook is the chart below "today's social mood signal."
 

Near term mood outlook: The social mood pattern corresponds with aggression and desperation.  Common themes associated with the mood pattern found in the news are uncertainty, confusion, and attempts to avoid appearing irrational or delusional.  The combined pattern, at times, accompanies global themes of violence, instability, and terrorist activity.

 

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

 

Longer term outlook: The social mood trend has turned down.  As long as it stays at or below its current level, it can be assumed that the trend is down.   

 

Today’s social mood signal is -6.0 S&P points.  Markets tend to follow social mood more often than not.  Signal has broken below support. Next support is a 4% drop.  A sharp drop of up to 4% could happen at any time now.

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Today’s news signal is -0.4 S&P points.  News tends to follow the general trend of the market, but on a daily basis, can either lead or lag the movement of the market.    

 

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Today's expected stock market range is calculated from -0.4 S&P points (news signal) to -6.0 S&P points (social mood signal), or-0% to -0.4%. It is also based on technical analysis of the social mood signal over the past three months. 

Shutdown Day 2-- Engaging the Enemy: Outlook 2 Oct '13

after market update: actual S&P -1.13 (-0.1%); Markets started down about 3/4%, then spent the rest of the session in a choppy climb to almost unchanged. 

News story that captured today's engaging the enemy theme almost exactly:  Progress? Obama, congressional leaders to talk on shutdown.
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Overview:  A U.S. government shutdown is in day 2, and there is likely to be a pickup in activity or at least the appearance of being busy (whether or not there are tangible results).  Social mood reflects activity and aggression.  The mood depicted by themes in the news is extreme polarization, lines in the sand, and us versus them.  Markets may want to use today's excess energy to push ahead, but the overall uncertainty in the news could keep a damper on things.

Today's Market Outlook is Down and Volatile (-0.3% to +0.3%).  At the time of this posting, the social mood signal is mildly positive, and the signal from the news is slightly negative.   The influence of the slightly positive (energized) social mood today would be that any news that is even slightly positive could lead to a large lift in the markets.  The primary influence on today's outlook is what is presented in the paragraphs below on near term mood outlook and near term market outlook.
 

Near term mood outlook: The social mood pattern corresponds with activity, aggression, and violence.  Common themes associated with the mood pattern found in the news are polarization, destruction, disasters, and government intervention.  The combined pattern, at times, accompanies global themes of violence, instability, and terrorist activity.

 

Near term market outlook: Social mood (and markets) may be in process of completing a near term bounce.  When this bounce is complete, mood (and markets) may once again drop down to test support. 

 

Longer term outlook: The social mood trend has turned down, but not definitively.  Confirmation of a continuation of the long term downtrend has not yet occurred. 

 

Today’s social mood signal is +5.7 S&P points.  Markets tend to follow social mood more often than not.  Signal is near support, the next few days are critical to direction. 

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Today’s news signal is -2.1 S&P points.  News tends to follow the general trend of the market, but on a daily basis, can either lead or lag the movement of the market.    

 

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Today's expected stock market range is primarily based on the mood pattern itself.  The calculated range from signals would be -2.1 S&P points (news signal) to +5.7 S&P points (social mood signal) or -0.1% to +0.3%.  As a polarity flip is in progress with social mood, the range is given as -0.3% to +0.3%.