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About Market Mood

About Dr. Cari Bourette

Dr. Cari BouretteDr. Cari Bourette has a unique method for measuring market sentiment, and obtaining actionable market data from that sentiment. She has developed a way to provide daily S&P 500, crude oil, gold, and USD forecasts based on her proprietary Market Mood Indicator. "DrCari," as she is known on the site, has a PsyD in Clinical Psychology, MS in Geoscience, MS in Counseling, and BS in Physics. Her sentiment analysis is based on 10 years of research into converting social mood information into numerical data, and, in turn, converting Internet search trends to market forecasting.

MarketMood Service

MarketMood Basic - S&P 500 ($39.95/month): Daily reports on the S&P 500, delivered shortly after market close, providing an actionable 1-3 day trade signal. Includes intraday signal updates, and weekend & monthly reports previewing and forecasting the upcoming week and month.

MarketMood Plus - Gold, Oil & USD (Additional $29.95/month): Nightly reports providing high probability 1-5 day trade signals on Gold, Oil & the USD, with additional "higher probability" signals for Oil and USD. Includes a weekly report with current outlook on the next 3 weeks for crude, USD, and gold.

MarketMood Indicator & How It Works

Basically, the MarketMood Indicator (MMI) turns the daily focus of U.S. Society, (often referred to as "Social Mood") into expected daily change of the stock market in S&P points for a period of 1-3 days from now (the same goes for crude oil, gold, and USD). The sole source of this information is the top daily internet search trends. The theory that includes the idea that changes in social mood almost always precede changes in the markets, is called Socionomics. See article published by the Socionomics Institute on the MarketMood model. Research leading to the development of the MMI has been going on since 2006 by Dr. Cari Bourette and a small team of researchers. In an article titled, "Daily Stock Market Movement from Oscillating Social Mood Factors," published Dec 27, 2011 by Berkley Press, in affiliation with Western Kentucky University, Dr. Bourette provides a detailed description of the 8 categories scored at data collection and the 4 primary mood qualities whose relative presence are the inputs to the MarketMood model. View the PDF here. The premises upon which the MMI is built are likely different from some that you currently hold about how the universe operates. Repeated exposure to the idea that themes in internet search trends about such things as Beyoncè and Game of Thrones that can be somehow quantified and converted to meaningful, seemingly unrelated data about what markets are likely to be doing 3 days later may cause some confusion and disorientation. At best, however, besides assisting in your trading strategy, it may expand the frontiers of Socionomics and the boundaries of what we currently know about the connection of what we think about today and what is happening in our lives tomorrow.

How MMI Works

This is a brief, but somewhat technical summary of the process of obtaining a stock market forecast for three days from now from hot internet search trends.

1). Get themes from Google Hot Trends (see example below of Hot Trends from February 15). In the example below, Alexander Hamilton themes are hiphop music, entertainment, historic, man, and leader. Vanity themes are woman, singer, minister, died, and nostalgia.

Example Trends

2). Code these themes into the 8 categories of MoodCompass nomenclature. Multiply by the number of searches (in this case 1 million each), and add them together. Simplify. The coding for Alexander Hamilton themes (after simplifying) was 2E 2W 2SW SE NW. The coding for Vanity themes was 4W NE 3NW. Adding these together: 2E 6W NE 2SW SE 4NW, simplified to 2E 6W SW 3NW.

3). Normalize—convert to relative percentages of NE, SW, SE, and NW (this is MoodCompass shorthand for the four primary mood qualities, Vulnerable, Expansive, Manic, and Controlled). In this example: NE 6.25%, SW 31.25%, SE 6.25%, and NW 56.25%. This becomes the input to the MarketMood model. This model analyzes the relative positions of each of these four basic mood qualities, as well as changes since the previous day. The daily changes in these four basic mood qualities for April 2016 are shown below:

U.S. Mood Qualities: April 2016 Chart

4). MarketMood model output: The MMI outputs an expected market change in S&P points. The chart below shows a daily cumulative "Mood Signal" vs. S&P Close. While the correlation is significant at the .0001 level, the daily direction is much more useful for trading than the amount of forecasted change for each individual day, as the movement in a single day can vary substantially from the model output for that day.

U. S. Daily Cumulative Mood SIgnal vs. S&P Close Year to Date

5). Daily Forecast. Finally, there's the daily forecast. At market close, the forecast for the next day's close becomes finalized, and the likely forecast for two days beyond that is obtained. It is possible (1 in 10 chance) that the direction for those days could change by tomorrow's close due to the next day's mood or market activity. On Thursdays, the forecast for Monday open is available, as it uses the combined output for Saturday and Sunday, and the assumption that weekend close = Monday open. On Fridays, the forecast for Monday close is available.