Portraits of Global Crises

Back when Trump ordered an attack on General Soleimani in early January, I posted a chart showing a "global crisis mode" likely to peak in February or March.  Putting the two together, I wondered if it meant that the Iranian crisis would escalate.  Now at the end of January, a global crisis mode has indeed continued, but the current focus is the coronavirus.  This is a reminder that while these pictures of mood give us important qualitative and timing information, by themselves, they don't give us all the details of the specific crisis or crises to expect.  That said, the indications are still for a global crisis mode through February or March.  It could all be about the coronavirus, or something entirely different.  What's more, looking at a quarterly perspective, there's indications of a global crisis mode through Q2 of this year.  Looking nearer term, at a weekly perspective, the next few weeks are reflective of some of the components that go with this same crisis outlook.  

When the orange and gray lines (Manic and Controlled) are either very close together or running in parallel, that can point to a governmental or global crisis of some type.  It also matters which one of these two is greater (on top in the chart).  When mood versus effect is normal, it points to trouble when Controlled is on top.  When mood versus effect is inverted, it's more concerning when Manic is on  top.  In both the monthly and quarterly mood charts below, these two components are running in parallel and close together in the circled areas.

The weekly mood chart below, shows these two mood qualities running in parallel next week and close together the following week.  Sometime during the following week (week ending 14 Feb.), the Controlled line moves on top which would show relief of the immediate situation, or at least the preoccupation with it.  However, due to a flip in mood vs. effect the week of the 21st, things are more likely to be at least perceived to be getting worse.

In summary, the first half of this year is likely to be a roller coaster ride of impactful news events, global crises, as well as market drops and rallies of relief.  Regardless of whether the market makes new highs or not during this time, another crisis period is likely just around the corner.  Fasten your seatbelts!

Dr. Cari Bourette is an analyst at ElliottWaveTrader.net, where she provides her proprietary market mood analysis in our flagship service, "Avi's Market Alerts."