|This essay by Mark Galasiewski originally appeared in The Socionomist in April 2009.|
In early March, Newsweek’s cover proclaimed, “Radical Islam Is a Fact of Life. How to Live With It.” Socionomist Mark Galasiewski believes that the headline probably marks the multi-year peak in Islamic extremism.
In the April issue of The Asian-Pacific Financial Forecast, Galasiewski argues that in Arabia and Central Asia—the two major centers of radical Islam—Jordan’s and Pakistan’s stock indexes are excellent proxies for social mood. He observes that major declines in these stock markets have tended to coincide with upswings in terror and other violence. The opposite is also true: When these markets rallied, Islamic terrorism and fighting fizzled.
For example, the war between Hamas and Israel over Gaza in December and January occurred after a decline of about 50% in the Amman General Index. According to Galasiewski’s Elliott wave analysis, the terrorist attacks on the Marriott Hotel in Islamabad and multiple centers in Mumbai followed the wave (A) decline in the KSE-100. He sees the attack on the Sri Lankan cricket team in Lahore in early March as a lagging effect of the low of wave (C). If Pakistani Taliban leader Baitullah Mehsud fails to make good on his promise to attack Washington, D.C. “soon,” Galasiewski believes it will be a confirmation of a bottom in Mid-Eastern social mood.
In addition to Elliott waves, Galasiewski supports his forecast with Paul Montgomery’s magazine cover indicator. Montgomery (Universal Economics, www.montgomerycap.com/universal_economics.html) first noted in the early 1980s that trends tend to make the covers of leading news magazines just as the trends are peaking. Galasiewski points out that Newsweek’s capitulation to the reality of Islamic extremism is dated March 2, one day before the low in the Amman General.
Galasiewski cautions that Middle Eastern and Central Asian extremists probably have one or two big tricks up their sleeves, as the mood in the early stages of a bull market tends to stay negative for some time. But societies lose their tolerance for antisocial behavior during bull markets, so Galasiewski’s analysis indicates that these provocateurs will have to wage their battle uphill.■
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