There's been substantial research and it's been repeatedly demonstrated that news themes and market movement generally follow social mood. By tracking what people are primarily paying attention to (through top internet search trends), it's even possible to get a heads up on social mood because social focus generally precedes social mood. By feeding projected social mood into an algorithm such as the MarketMood Indicator, a stock market forecast can also be generated. By looking at recognizable patterns in the projected social mood, likely upcoming news themes can be spotted.
The weekly MMI vs S&P chart has been tracking incredibly well for some time. Over the next few weeks, I'm less certain how precisely it's going to track week by week. However, the overall picture it's painting is a bounce followed by further downside.
For the week ahead, there's a cluster of three of the four mood qualities we track nearly on top of each other. At any other time of year, this "hunker down" type of pattern might be concerning. However, with many people known to be off work and spending time with family for the holidays there's no good reason to infer something out of the ordinary here. We will be closely examining the daily data as it comes in to see if there is any further attention warranted.
As the new year begins, a "crisis mode" pattern becomes more distinct and recognizable. Whether this is weather related, economic, or something else is yet to be determined. This "victimization" pattern implies people feeling that something is happening to them or at them.
Recently, we've been compiling data from several countries and putting them together into a "global mood." In the global picture, this crisis pattern is appearing over the next two weeks and is marked on the chart as a perception of "deteriorating (global) conditions."
It would have been my preference to point out something cheery to accompany wishes for a Happy New Year! Yet, a global good mood may yet be an uphill climb. In whatever way you and yours enjoy the holidays, be well and be safe!