Tuesday, February 01, 2011

Egypt Unrest Revolution Opportunity?

Egypt Unrest
Egypt Protests: Another Domino?

Before the government fell in Tunisia, and before the first can of tear gas was thrown in Egypt, analysts at the Socionomics Institute forecast an environment likely to foster an increase in violence across the region.

By analyzing trends in other Arabian markets, researcher Mark Galasiewski made this observation in November 2010, stating

. . . because mood is often most exclusionist following the end of major corrections, we expect increased violence in the region soon."

Soon after, the December 2010 issue of The Socionomist offered this:

Market Trends Social Events

The chart [below] shows major social events in the Middle East in conjunction with the S&P 500, the Tel Aviv 100 and the Amman General stock price indexes. These stock indexes reflect the social moods in the United States, Israel and the Arab world, respectively.

The Jordanian stock market is a useful indicator of pan-Arabian mood because it is the oldest continually traded Arabian market and the others tend to trend with it. Inclusionist events are displayed above the price lines, and exclusionist events below them.

As you can see, the events noted on the chart generally express the previously rising or falling trends in social mood for each society. Socionomics Institute founder Robert Prechter calls this the socionomic hypothesis.

The historical relationship between stock market declines and violence led to our forecast of even more violence, especially given that Arab markets have stagnated or been in decline for five years:

The weekly bar chart, available to subscribers, shows all the violent events listed on Wikipedia's "Arab-Israeli Conflict" page since the bear market in Arabian stocks began in late 2005, charted against our Israeli and Arab mood meters; all of these events occurred after declines in the stock market and thus are compatible with the socionomic hypothesis.

This chart of the Dubai Financial Market General Index from the November 2010 issue of Global Market Perspective shows an A-B-C correction that ended at the 2009/2010 lows:

Dubai Financial Market

The economic desperation across the Arab world at present mirrors the financial desperation felt by Dubai's creditors at the 2010 low…. The common thread is the extreme in social mood.

What will happen next?

You can get the rest of Galasiewski's prescient study with a risk-free subscription to The Socionomist, the monthly publication that prepares you for important social changes most people never see coming. Each issue connects the dots from the past to the future to where you are right now with at least 10 pages of unique, eye-opening research.

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