Are you seeing the news tonight? It is totally ridiculous. Headlines are Death, Destruction and Mayhem but the words inside the associated stories don’t match the extreme negativity suggested by the headlines. In fact, you read the stuff and it turns out that nothing unreasonable is going on and nothing meaningful has really changed from Friday. You can almost hear the bear blogs kegel in anticipation.

We talk in circles about “the news cycle” and “the news is getting worse” and “he’s just making up the news,” but can we quantify how it flows? How can we use that flow to help us? Let’s do some stretching to at least pretend we can use it to our benefit.

A number of years ago, Dad the Banker told me “It is all about the consumer’s feelings. If you can make them feel like they need to buy something, they will.” I was a young buck when he said it so many moons ago, and not too long after I learned that this is the heart of marketing. But what always struck me was that he scoffed at every piece of economic news not directly related to consumer feelings. (Happy Father’s Day, Pop!)

Since then, I remember reading about how you could gauge the general feelings (happy, sad, angry, etc) of the populace by what films were showing and what sub-set of those shows did well. Somewhat related, just throwing that out there.

It is all anecdotal because you can’t put numbers on or assign metrics to such emotional thing-a-mabobs. The closest we come is a concept similar to what Chess said the other day: if the stocks stop going down in the face of bad news, they are probably done going down. You can measure that one pretty quick. Bad news? Check. Stocks not responding lower? Check. Decline on newsflow is probably done.

The closest things we have to measure investor feelings up front and at the back with relatively hard data are AAII surveys and the put/call ratio. Unfortunately, performance related to timing using these two is atrocious.

I am feeling particularly negative these days and so thought it was worth a trip down the road of negative news analysis. Let’s take a look at one of the worst of the worst emotional events that may or may not be impacted by newsflow.

Below is a chart showing the dates of school shootings as listed in a Wikipedia article. It goes back to 1966, and the bars in the chart simply indicate a single date of incidence.

The subject is certainly disturbing enough on its own, and worse is how the frequency picked up considerably from the 1990s. Whatever, we are not here to dissect the subject matter. Let’s just look at 2006 forward.

At this point we can see more clearly into each year. What is most interesting about this chart is how the incidents are clustered together. They don’t occur evenly. A group of events occurs and then there’s a break. I had read somewhere (one of those Gladstone or Gladtree or Gladwell books?) that these incidents clump together in copycat fashion, and that teen suicides are similar in that extra-special measures need to be taken after the first incident to prevent subsequent occurrences because of the high probability of copycat incidents.

Whew, let’s take a step back from that ledge. Getting a little too spooky.

In terms of directly measuring news for effect on stocks, Chess’ comment is probably the best way to approach things. It likely signals a near-term end to a negative news cycle. If the above chart is meaningful in relation to how news of one event inspires another, an end to a negative newscycle means we get at least a short term break in relation to an effect on stocks. I think total confirmation of the end of this current negative news cycle comes with Zerohedge rolling out that ex-hack director cum copycat econ analyst Gonzalo Lira. At that point, we know the current negative news cycle is over and we get a break for a little while.

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