Market sentiment is a series of ones and zeroes

If a computer program can determine the general mood of the market and make resource allocating decisions based on those determinations, then what the hell do I need this invisible hand for?

Math-loving traders are using powerful computers to speed-read news reports, editorials, company Web sites, blog posts and even Twitter messages — and then letting the machines decide what it all means for the markets.

The development goes far beyond standard digital fare like most-read and e-mailed lists. In some cases, the computers are actually parsing writers’ words, sentence structure, even the odd emoticon. A wink and a smile — ;) — for instance, just might mean things are looking up for the markets. Then, often without human intervention, the programs are interpreting that news and trading on it.

Don't look now, but I think Wall Street may have finally killed God. The God of the free market anyway. We are told the actual God was killed years and years ago by either Elvis' hips or the sale of K&B to Rite Aid but scholars continue to debate this. Meanwhile the Market God has been replaced by what appears to be a matrix of spam bots tweeting at one another all day and night. Just remember that Phase 3 is profit.

Some of these programs hardly seem like rocket science. Working with academics at Columbia University and the University of Notre Dame, Dow Jones compiled a dictionary of about 3,700 words that can signal changes in sentiment. Feel-good words include obvious ones like “ingenuity,” “strength” and “winner.” Feel-bad ones include “litigious,” “colludes” and “risk.”

The software typically identifies the subject of a story and then examines the actual words. The programs are written to recognize the meaning of words and phrases in context, like distinguishing between “terribly,” “good” and “terribly good.”

I am horrifically pleased to read this. (Really) But I do wonder what these programs do with two news items whose actual subjects appear to be in contradiction.

For example, today we read that oil prices are up. And when oil prices go up, the news analysis is full of scanable context.

“Crude oil is the most highly correlated and best proxy for the global economy,” said Richard Ross, global technical strategist for Auerbach Grayson.

After trading sideways for much of the year, oil investors are starting to look forward to rising demand in the U.S. and emerging markets, and those hopes have been bolstered by an extended run in the stock market and gains in the Dow Jones Transportation Average , Ross said. “When there’s velocity of commerce, that’s going to manifest itself in higher oil prices,” he added.

But wait. One thing about that rising demand in the U.S. we're starting to look forward to. It was just yesterday that we picked up our T-P and found this widely printed Associated Press story.

After seven decades of mostly uninterrupted growth, U.S. gasoline demand is at the start of a long-term decline. By 2030, Americans will burn at least 20 percent less gasoline than today, experts say, even as millions of more cars clog the roads.

The country's thirst for gasoline is shrinking as cars and trucks become more fuel-efficient, the government mandates the use of more ethanol and people drive less.

"A combination of demographic change and policy change means the heady days of gasoline growing in the U.S. are over," says Daniel Yergin, chairman of IHS Cambridge Energy Research Associates and author of a Pulitzer Prize-winning history of the oil industry.

So what are we doing here? Are we looking forward to rising demand or hunkering down for long term decline? I know I wouldn't want to be a Wall Street spam-bot in this situation. Luckily I still have Google Ngrams to play with. They seem to have a pretty good knack for this sort of advice. That is, if you know which questions to ask.