04/01/11 – Keep Ahead of the Herd in 2011

That’s not how we view the world here at Elliott Wave
International, where instead we study patterns of positive
and negative mood to predict changes in the stock market, current
events and other trends.

Pop culture trends are more than just “interesting” — analysis
of social mood trends is part and parcel of Elliott Wave
International’s technical approach, helping us anticipate
changes that most people never see coming.

Prechter’s groundbreaking paper, “Pop
Culture and the Stock Market,” first
published in 1985, lays out the foundation for his contrarian
analysis:

1) Popular art, fashion and mores are a reflection of
the dominant public mood.
           
2) Because the stock market changes direction in step with
these expressions of mood, it is probably another coincident
register of the dominant public mood and changes in it
.
3) Because a substantial change in mood in a positive or
negative direction foreshadows the character of what are generally
considered to be historically important events, mood changes
must be considered as possibly, if not probably, being the
basic cause of ensuing events.

Both a study of the stock market and a study of trends
in popular attitudes support the conclusion that the movement
of aggregate stock prices is a direct recording of mood and
mood change within the investment community, and by extension,
within the society at large.

It is clear that extremes in popular cultural
trends coincide with extremes in stock prices, since they
peak and trough coincidentally in their reflection of the
popular mood.

The stock market is the best place to study mood change
because it is the only field of mass behavior where specific,
detailed, and voluminous numerical data exists. It was only
with such data that R.N. Elliott was able to discover the
Wave Principle, which reveals that mass mood changes are
natural, rhythmic and precise.

The stock market is literally a drawing of how the scales
of mass mood are tipping. A decline indicates an increasing
‘negative’ mood on balance, and an advance indicates an increasing
‘positive’ mood on balance.

The positive and negative events and trends of any given year
paint a picture of society’s mood as a whole. Haven’t we
seen enough conventional forecasting fail miserably (remember
the 2007-2009 debacle?)  to consider an alternative method?  

This new year, resolve to look at the world in a different
light, and learn to anticipate changes that will keep you ahead
of the herd with an understanding of socionomics and the Elliott
Wave Principle.