CNBC Staff Collective Mood and Stock Market Movement
Abstract:
The collective mood of the CNBC staff before the market opening each day for 29 trading days was determined through scoring the clothing color and the mood of the commentary. They were scored using the One Wheel system, and the two scores were averaged. The scores were compared with the activity in the Dow Jones, Nasdaq, and S&P Index current month futures contract prices. Significant correlation was found between the stock market movement and the collective mood of the CNBC staff in several key One Wheel factors. Analysis of the changes of mood in the CNBC staff prompted the recognition of what could be general patterns of change within both the staff mood and the market data. Ambivalence in mood as well as in the stock market (referred to by traders as “dojis”) was observed to occur at the end of a cycle. A working model of regular stock market oscillations was developed for further study and validation. This model indicates a significant market top at or near July 18th, 2007 which may signal the end of the current bull market.
Cari Bourette, Psy D
Director, Markets Project
A New Story Foundation, Inc.
Email:
Copyright 2007, A New Story Foundation, Inc. All rights reserved.
CNBC Staff Collective Mood and Stock Market Movement
INTRODUCTION
Because the “well-being” of the market and the well-being of society are intricately connected (Prechter 1999), the ability to predict major market changes would be an important tool in a search for indicators of future social instability on a national or even global scale. Needless to say, the fluctuations of mood on such a large scale are difficult to measure on a day to day basis. If fluctuations of mood in a much smaller group could be found to correlate with the larger collective mood (as indicated by stock market movement) perhaps a tool could be developed to assess the mood and likely mood fluctuations of the larger society. A group chosen for its apparent cohesion as well as its daily connection with information on the stock market is the staff of the CNBC morning shows. The collective mood of the CNBC staff before the market opening each day for 29 trading days was determined through scoring the clothing color and the mood of the commentary. They were scored using the One Wheel system (Bourette 2006), and the two scores were averaged. The scores were compared with the activity in the Dow Jones, Nasdaq, and S&P Index current month futures contract prices.
The One Wheel system (or Ekacakra) is conceptually an archetypal model of eight categories or elements whose relationship can be depicted as a circle. The names used for four of these elements come from traditional systems for describing the world found in some North and South Amerindian cultures, ancient Greece, India, among others. These are the primordial elements, Earth, Air, Fire, and Water. One Wheel also recognizes four additional archetypal elements which lie in the circle, or wheel, between each of the others, and are necessary for a more complete picture. The four hybrid elements are Anima, Animus, Challenger, and Limiter. People and events may be described in useful ways and perhaps better understood using this language of eight elements. Figure 1 below illustrates this arrangement.
Fig. 1 - One Wheel Circumplex of Eight Elements
The qualities and attributes of the One Wheel elements can be seen in individual people, in groups, and in the cultural expressions of larger groups. They are measured in terms of affect or communicated mood as experienced by an outside observer. The affect of non-human events and systems can be also measured or described in terms of its effect on a human observer. This method combines the subjective and objective in a way that seems to consistently produce useful results. For the purpose of orientation to this system, a brief description of each of these follows. The descriptions here are not comprehensive and are not sufficient for someone not trained in using the One Wheel model to apply the system or duplicate this research.
Earth. is materiality, and the material (earth) of which we are, and receive nutrients from (indirectly) through food. Its primary color representation is green, but also brown and other “earth tone” colors. It is reflected in stability, quiet and stillness. This archetype is represented by such things as “home”, the physical body, identity, and sometimes “Earth Mother.” It is the quiet, bundle-up and hunker down season of Winter (pre-commercialized Christmas).
Fire is the polar opposite of Earth. It is intense, harsh, combustive, and fast. It is represented with very bright colors, but primarily red, which seems to signal a need for attention which can be positive or negative (e.g. Stop, lady-in-red, or Danger). It is activity or action. It is reflected in emotionless rage, and with such words as “insatiable” or “relentless”. It is sometimes represented by the number 1 (as in a single sharp blade, single-minded, or in “first”). It is the activity-oriented, time-to-go-somewhere season of Summer.
Air is the digital or component side of information. It is linear. It is often described in terms of thinking or logic as opposed to feeling or intuition. It is also sometimes put in terms of conscious thought in contrast to unconscious process. Its primary color representation is pastel yellow, although other pastels or neutral colors are used. This element is commonly associated with Spring, sunrise, beginnings and the direction East (e.g. Easter).
Water is the polar opposite of Air, and is the analog or holistic side of information. Being non-linear, it is associated with dreams and emotion. Its primary color representation is deep blue, although sometimes is seen as black. It is also sometimes depicted by the moon, especially when connected with a human’s animal nature, uncontrollable emotions, or base instincts. This element is associated with Fall, endings, sunset, and the direction West.
Anima combines Earth and Air qualities, actively communicating receptivity. As a personality archetype Anima is welcoming, inviting, a facilitator, organizer, always making new friends, easily trusted, likes talking, but doesn’t over do it. Jung (1971), used Anima to refer to the “feminine spirit” in men. The term is adapted in One Wheel referring to a generic feminine or receptivity. Some colors associated with Anima are soft pink, light lavender, and silver. Expressions of encouragement are associated with this element.
Animus combines Fire and Water qualities into passion and directed action. Jung (1971), used Animus to refer to the “masculine soul” within women. It has been adapted in One Wheel referring to a generic masculine or projectivity. Animus is often depicted by the colors gold, deep purple, and also by the combination of red and blue As a personality archetype, Animus is a leader, and guides others forward in a “right” direction. It is also related to life drives such as the enjoyment of food and sex. A positive, forward looking attitude is an expression of Animus.
Challenger combines qualities of Fire and Air into chaos and disorder. It is signaled by the color orange, the combination of red and yellow, hot pink, bright yellow-green and fluorescent or neon colors. As a personality archetype Challenger is always challenging and being challenged, keeping others guessing, and manipulating words and symbols to get the upper hand. Mania, pandemonium, and excessive untethered exuberance are expressions of Challenger.
Limiter combines qualities of Earth and Water into the death and birth of one structure or order into another. It is signaled by the color gray, the combination of blue and green, and by a creamy or antique white. As a personality archetype Limiter is complex, mysterious and difficult to get to know. Worries of unseen things, and fear of what goes “bump in the night” are expressions of Limiter.
The One Wheel model (or Ekacakra) is a general conceptual representation of all possible events. Figures 1 above depicts a 2 dimensional static version of the model. Figure 2 below illustrates a dynamic oscillating version.
Figure 2. Dynamic, Oscillating Conceptual Model of the Universe
Of the eight components or elements of the Wheel, the four making up the space-time plane (Existence or Earth and Fire, and Information or Air and Water) are assumed to be relatively static. The two spatial factors associated with living systems and growth, Anima and Animus, oscillate at right angles to the two temporal factors associated with entropy and change, Challenger and Limiter. According to the model, as the two spatial factors expand, the two temporal factors contract, and vice-versa. These relationships and cycles are presumed to occur in all complex systems as fractals of the one system (the universe). Such assumptions can never be expected to be proven, however the use of such a lens to view the world leads to the discovery of patterns and relationships that otherwise might be overlooked. Proof would be, so to speak, “in the pudding,” that is, in the results and their usefulness. Once a useful relationship or application is found, an explanation grounded in a more traditional or common framework can be sought. It is never a goal to prove that the universe actually “looks” like either Figure 1 or Figure 2. However, it can seem to work this work way, which makes this a useful all-purpose sort of tool.
METHODOLOGY
The affect of the CNBC staff was scored each day before market opening (between 6:00 AM and 8:30 AM Central time) for 29 trading days through a combination of “attire” and “expressed mood.” The clothing for each person observed that day was scored by color, and a group attire score was derived from that. Sentiment expressed verbally or non-verbally was subjectively scored. The two scores, attire and expressed mood were averaged together to form the “total affect” score for the day. These three sets of scores attire, expressed mood, and total affect were correlated with the market movement for that day. In general, for scoring clothing colors, Earth roughly goes with “Earth tones”; Water generally goes with blue and black; Fire with red; Air with pastels and lighter colors. Anima (Earth + Air goes with “feminine colors” such as light pink, and silver; Animus (Fire + Water) with purple and gold; Challenger (Fire + Air) with orange, yellow green, and anything chaotic; Limiter (Earth + Water) goes with grays and blue-greens. These were coded by the directional representation of that element (North for Earth, South for Fire, Northeast for Anima, etc.). Combinations of colors on an individual were given combinations of codes. These were resolved to the score best representing the affect portrayed by that person’s attire.
For example, David is wearing a red and blue tie, a light blue shirt, and a black jacket. This is coded as Southwest (red and blue), East (light blue), and West (black). This is resolved as SW + E + W => SW (East and West cancel each other out). The rules for “Wheel algebra” are as follows: 1) Cancel out to reduce noise, but not if information is lost; do not cancel out if there is more than one way to resolve. 2) N/S or E/W cancel each other out when other components remain. 3) NE / NW reduces to N, NE / SE reduces to E, SE / SW reduces to S, and SW / NW reduces to W. 4) This reduction is done for a single individual or system component, not for the total scores of the system.
The number of each type for all individuals scored is totaled for that day. For example, 4W 2NE 7SW 2SE. Since a different number of individuals are observed on different days, this is then normalized. If there were 7 individuals rated that day, the attire score for this example would be 1/7 * 100 (4W 2NE 7SW 2SE) or 56W 28NE 98SW 28SE.
For scoring the expressed mood, in general, Anima goes with encouragement; Animus goes with a positive, forward looking attitude; Challenger goes with giddiness; and Limiter goes with fear or somberness. The subjective degree of that element is given a value between 1 and 100 (the minimum rated tends to be 10 and the maximum 60). For example, on a morning with extreme silliness, people tripping over themselves, dropping things the score might be 20S 60SE.
Total affect is then arrived at by averaging the two scores, attire and expressed mood. In this example, 56W 28NE 98SW 28SE and 20S 60SE gives us 10S 23W 14NE 46SW 44SE. These three sets of scores are correlated with stock market movement using the Dow, Nasdaq and S&P futures contract daily net change, range up, and range down. The daily net change is closing price - opening price, the range up is daily high – opening price, and the range down is the opening price – the day’s low. These three measures are symbolized by Δ, Δ↑, and Δ↓ respectively. Change strength or Δ Str is the absolute value of daily net change. The formula used for calculating correlations is Pearson Product Moment or
.
RESULTS
The composites (NE or Anima, SW or Animus, SE or Challenger, and NW or Limiter) are separated into their components, and added to the totals for N or Earth, S or Fire, E or Air, and W or Water. An alternate Challenger and Limiter designated S+E and N+W, respectively are calculated from Fire +Air + Challenger and Earth + Water + Limiter. S+W is an alternate designation for Animus calculated from Fire + Air + Animus scores. Tables 1 and 2 below gives these scores which will be used for calculating correlations.
Table 1 Attire and Expressed Mood Scores
Attire Expressed Mood
date / Earth / Fire / Air / Water / S+E / Lim / Earth / Fire / Air / Water / S+E / N+WApr 20 / 85 / 0 / 17 / 51 / 17 / 17 / 0 / 90 / 60 / 0 / 90 / 0