Socionomics, the science of social prediction, pioneered by Robert R. Prechter Jr., provides education and benefits individuals and institutions through a better understanding of the dynamics of social and cultural change. Trends in collective psychology play a key role in the Elliott Wave Theory. Happy and optimistic people buy stocks, while pessimistic people sell stocks. Negative events such as wars and epidemics follow stock market declines and positive events such as peace and the creation of unions follow stock market advances. The Dow Jones Industrial chart is not just a record of prices, but also a record of actions taken, when there is a change in mood. The rising prices indicate a positive social mood and the falling prices a negative mood. But if we go deeper into the socionomic view, we will see, that negative mood can be the cause not only of falling prices in stocks, but much more than the mind can imagine. Economic factors, news and social events lag the stock market. This is why we think, that social mood is key. We believe, that social mood is history’s hidden engine. Every financial crisis is not just an economic turmoil, but can be a threat to our health and well-being.
The first chart shows us, that at the bottom of the major bear markets, wars appear.
The bigger the crisis, the bigger the war. Wars take time to develop and that is why they appear in the third wave of a stock market decline.
The second and third charts show us the major breakout of the biggest epidemics in history and again they appear, when negative social mood is at its highest point.
Charts by Socionomics Institute and Elliottwave International: