Cold Turkey

A Bloomberg report on Xmas Eve stated that BlackRock Inc., the world’s largest money manager, was “seizing the opportunity to buy Turkish stocks after political turmoil rattled other investors and drove down prices,” going on to infer that the slide in The Borsa Istanbul 100 Index was down to the ongoing corruption probe against Prime Minister Recep Tayyip Erdogan’s government.

Sam Vecht, head of the emerging markets specialist team at BlackRock in London allegedly said that, “valuations are now compelling and historically, in emerging markets, it has paid off to be brave when others are fearful,” observing the 9% slide in the index since the police began raids on the 17th December 2013.

Any student of Socionomics would be wary of any claim that events govern social mood, recognising that in fact social mood governs events,so a quick look at Turkey’s main stock-index, in local currency terms, a barometer of Turkey’s collective social mood, reveals the following:-

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  • That in local currency terms, the Borsa 100 actually peaked back in May 2013, at 93178, not on the 17th December, suggesting that the burgeoning corruption scandal is an event following the reversal of collective social mood from one of super-optimism, when one looks at the quadrupling of price since the November 2008 market low.
  • Subsequently the index has fallen by a further 4% by yesterday’s close, which would see a penetration of the lower support line of the red trend-channel and a breech of the red-dashed-line in respect of the index relative to the world index.

This was predicted by a glance at the index on the 24th December, in $US terms, where one can note that not only had the index supports already been breeched, but social mood had peaked way back November 2010, when the market topped in dollar terms:-

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So have BlackRock bagged a bargain? Only time will tell. However, when Socionomics is teamed up with an Elliott Wave pattern, it would suggest that there is a lot more “Cold Turkey ”  yet to follow the bullish extremes of late.

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