Wednesday, December 22, 2010

Socionomics

The study of the stock market to detect social mood - and vice versa.  From the latest Socionomics Institute release - The Socionomist.
This shows the Dow priced in gold. My forecast remains for higher gold so what will that do to this chart?

7 comments:

Amalan said...

if you are looking for rising gold prices and this chart trends even lower, does it mean there will be even more dark days ahead? The question is whether sentiment is wagging prices or vice versa? I think next year is going to be a slow year for gold, the pause before breaking out to new highs in 2012 - 2014 timeframe. As Mark Leibovit (trader/technician) said earlier this year, gold is probably going to $3000 range. I just think it won't happen by next year. It will coincide with the shakeout bottom on the equity markets sometime between 2013-2014.

Gestion said...

Although bearish, the chart does not imply a downtrend on the Dow. It just means that the gold rose faster than the Dow, but both were up this year.

Quick Takes Pro said...

In Socionomics, sentiment derives directly from the stock market (not the other way around). Sentiment is the tail, not the dog.

Wars usually occur after bear markets are old. The worse the bear, the worse the war. I'll leave it to the Socionomics Institute to figure out what war happened in 2009.

Quick Takes Pro said...

Gestion, you are correct. All I asked was what happens to the chart when gold goes up. I happen to think stocks will not have a banner year.

patrick neid said...

Another Prechter chart that helps sell books with generally zero predictive value. That said Prechter's woven tales of social commentary are very entertaining.

Quick Takes Pro said...

Patrick, love him or hate him, if you ever get the chance to hear Robert Prechter speak, take it. He is a fantastic speaker and convincing debater.

patrick neid said...

I have heard him speak a couple of times and a good friend of his/mine of "cycle finder" fame sat next to me at EFH in the 80's. Read his newsletter for over 20 years. His books sit on my shelf. I still use, despite computers, his original Fibonacci tool for quick measurements.

My point is Prechter sells books and that should never be forgotten. His woven tales of politics, social trends and the market on a grand scale are the best. But attempting to use that info for trading is/can be dangerous to your fiscal health.In fact he can be so convincing that it impairs an average investor's ability to think for themselves. I saw it with my clients such that they missed years of great investments despite any pleadings.