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U.S. Stock Market Health and Social Mood

There has recently been an increase in posts around the internet and in the news that the U.S. stock market may be about to plunge to a mere fraction of its current value. At the same time, the market continues to go up, defying even the most adamant of bears.

In response to a request by a follower of this blog, we will chime in on what current U.S. social mood trends have to say about the health and well being of the stock market (apologies to those who aren't stock market fans as the language in here is geared towards market people and traders).

1). Social mood (as measured by our assessment of daily top Google Hot Trends) peaked near November 19, 2012. It has come down in a choppy fashion and is now at "support." What it does from here is critical, not only for the well being of the stock market, but to the socioeconomic vitality of the United States (and likely, the world).

2). Manifested social mood (as measured by our assessment of daily top U.S. news stories) may have peaked on January 14, 2013. It has yet to make a "lower low." FYI- Google Hot Trends signals have a better track record of being predictive of the stock market than U.S. news stories.

3). The weekly projection for next week (from a 7 day EMA Google Hot Trend signal) is showing the first down week in six weeks. While this week's projection (week of Jan 21) was showing slightly positive, it was also indicating a trend change was near.  A new downtrend starts with one down week, however, by itself this does not indicate that the much anticipated huge decline has begun.

4) Last, but not least, for those who follow Ellliot Wave patterns, the market has not yet risen above the 2007 high. This would indicate that a sharp third wave down is still possible, and would have to begin momentarily (for more information on the Grand Supercycle, Elliot Waves, and what that means for the stock market as well as global society, see http://elliotwave.com).   It is also possible that the markets will make new record highs, and then begin the first wave of the Grand Supercycle decline. If so, that would mean less of a decline, at least initially

For those looking for a big change in the market and the outlook of the world, this would be the year that it happens, and it is a good possibility, all things considered, that we could be days away from the beginning of that change to manifest in the markets. However, there is no evidence that we can see at this time, that it won't be another few weeks or even months for the Great Downturn to occur.  Since social mood precedes stock market behavior, the next few days and weeks will tell us if we are about to soar to new heights or fall faster and farther than any of us in America could have ever imagined.

Hang on!

For more information on how we assess social mood and its relationship to the stock market see the "Mood and the Market" tab at http://moodcompass.com.

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