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Swine Flu and Elliott Wave Analysis
Think epidemics are random? Think again.
When R.N. Elliott first discovered the Elliott Wave Principle back in the 1930s, he applied it only to forecast the stock market -- the DJIA, to be exact. It was only decades later that his successor and EWI's founder Robert Prechter observed that Elliott wave patterns in stocks reflect much more than just stock prices.
First and foremost, major stock market trends mirror the ups and downs of society’s overall mood state – or social mood, as Prechter termed it in the new science, socionomics. (Look it up if you're not familiar with it.) A rising (“bull”) market indicates improving social mood, while a falling (“bear”) market signals that society’s mood is worsening.
Of course, social mood as the driving force behind stocks, economy and cultural trends turns the conventional idea of causality on its head. Controversial as this idea may be, in his books and the monthly Elliott Wave Theorist, Bob Prechter documented multiple cases to show that how a society “feels" will drive not only the stock market, but also trends in music, fashion, politics, sports, religion and other social and cultural manifestations -- including disease epidemics.
The fact is that epidemics and pandemics seem to hit populations during major negative social mood trends. ...when we study pandemics of the Dark Ages or the Spanish influenza epidemic that broke out during the bear market of 1917 (which year also saw intense fighting in World War I and the Communist coup in Russia), there always appears to be a bear market in force, and the extent of the epidemic tends to correlate with the size of the setback in mood. -- Bob Prechter, The Wave Principle of Human Social Behavior, Chapter 18.
If you want more proof, take a look at this chart of Asian bird flu outbreaks plotted against the prices of Hong Kong's Hang Seng index. (From the July 2008 issue of EWI's monthly Asian-Pacific Financial Forecast.)
As you can see, disease outbreaks are not random -- just like the stock market, they follow an Elliott wave pattern.
This socionomic knowledge puts the latest news of a severe swine flu outbreak in Mexico in perspective, doesn't it? Our latest forecasts can tell you right now which way social mood is likely headed from here -- in the U.S., Europe and Asia. (Read them risk-free for 30 days.)