Following are my personal comments on specific markets and issues. I chart markets for a hobby and my comments are the result. They are not recommendations to buy or sell anything and should not be thought of as such. They are for entertainment purposes only so enjoy.

David Bruce Edwards - Northern Front LLC September 10th, 2017

dedwards-1@comcast.net

Please remember, the following is pure speculation based only on my experience and chart patterns. "Every sunken ship has a room full of charts."

Note - I got a new wider screen monitor and when I look at this web site with the screen size in full, the site spacing does not come out properly. By making the window less wide all of the text and graphics slide into place. Perhaps you are having the same experience. DBE.

Matthew 24

3 Now as He sat on the Mount of Olives, the disciples came to Him privately, saying, “Tell us, when will these things be? And what will be the sign of Your coming, and of the end of the age?”

4 And Jesus answered and said to them: “Take heed that no one deceives you. 5 For many will come in My name, saying, ‘I am the Christ,’ and will deceive many. 6 And you will hear of wars and rumors of wars. See that you are not troubled; for all[a] these things must come to pass, but the end is not yet. 7 For nation will rise against nation, and kingdom against kingdom. And there will be famines, pestilences,[b] and earthquakes in various places. 8 All these are the beginning of sorrows.

For the last two weeks it has been nothing but frightening news and the expectation of more to come. The guy in N. Korea just won't leave it alone. Even though he has trouble getting a missile to go a few hundred miles he keeps threatening to take us out. We saw 24 hour coverage of Biblical floods in the Houston area and as I write Irma is tearing apart islands and near Florida. It is 60 degrees and clear here but my mental image of "outside" is that a hurricane is coming even though I am in New England. On top of that, the Patriots lost!

 

ten noteT Bond S

 

 

 

 

 

 

 

 

 

 

 

 

 

In the markets, the widely advertized seasonally weak periods of September and October hung over trading with bonds rallying on every stock market down tick and piece of news about N. Korea and natural disasters. On the left is the U.S. 10 year T Note. On the right is a graph of the last five days of trading in the 30 Year Treasury bond futures, the more rate sensitive instrument. Between midnight and one AM on Friday morning, the "flight to safety" trades, T bonds, gold, Yen against the Dollar and Euro against the Dollar peaked then traded down into the U.S. open. As the day went on they faded more. Could Thursday night have been a peak time in anxiety and fright? Let's see what happens over the weekend. If we are breathing non-radio active air on Monday then perhaps the maximum point of anxiety hit in the middle of Thursday night.

 

 

 

copper s

 

 

 

 

 

 

 

Among the items reversing on Friday was copper, a recent favorite. By the close in the U.S. two weeks of gains were wiped out.

 

 

 

 

 

 

 

 

 

 

 

 

 

PLPA

 

 

 

 

 

 

 

 

 

 

 

 

 

Platinum and palladium also reversed late in the week with Palladium seeing the worst of it.

 

 

 

 

 

 

 

 

 

DX

 

 

The Dollar got hammered over the last month. To the left is a chart of September U.S. Dollar futures with a slow stochastic oscillator below. The Dollar made new lows for the move over night then reversed. Money moves away from conflict and disasters. If Florida still exists on Monday morning then we could be at the lows for now. Futures traders are heavily short Dollars and long Euros and Yen. Commercial participants have the opposite position: long dollars. Extreme sentiment measures are not exact timing tools but they warn you to not jump on the band wagon after it had a good run. If we are at a peak in worry about things in the U.S. then it is time to buy Dollars. Note that the slow stochastic oscillator is diverging with price at the new lows.

 

 

 

 

 

 

 

 

 

 

 

eu top

 

 

Regular readers know that I was looking for the finish of a five wave up move, the third leg of an irregular flat form, common as a corrective pattern in a larger down market. As of the end of last week the pattern looked potentially complete. The ECB held interest rates steady and said they were thinking about lessening their bond buying program. Traders are looking at Europe's economic recovery and the potential for higher interest rates as the ECB backs off. No matter what the news, the form looks complete and a correction probable.

 

 

 

 

 

 

 

 

 

 

 

 

wkly rsidly rsi

 

 

 

 

 

 

 

 

 

 

 

 

 

Gold did well over the last couple of weeks of natural devastation, worry about a fall implosion in the stock market, Washington intrigue and N Korean threats. Both these charts show the closing price of gold in NY with an RSI momentum oscillator below in red. The chart on the left is the daily and the right side is the weekly. Both are approaching "over bought" territory with the daily reading at a comparatively high level. A high RSI reading is not a sell signal but it does tell you that a lot of fun already took place in a market and that you are late to the party.

 

 

 

 

 

 

 

 

 

rank tworank one

 

 

 

 

 

 

 

 

 

 

 

 

 

Above are two related charts. The blue line on both is an index of gold and silver mining companies. On the left side the red oscillator is a ten week moving average of this industry group's performance against more than 140 other industry groups. You can see that in past cycles when the oscillator reached the top of its range the move was close to being over. On the right the red oscillator is a measurement of how many times the gold and silver mining group was ranked among the top 20 over the last ten weeks. It was 7 out of 10 as of Friday night, a feat it managed only twice before in 17 years of data. The last two led to sell offs in bullion and the shares.

 

 

 

 

 

 

 

 

 

GDX S

 

 

 

The VanEck Gold miners' ETF is one of the popular ways to play a gold and gold mining stock rally. Two weeks ago I warned that the coiling pattern would break out in one direction or another with good energy. It went up. Notice the slow stochastic oscillator at the bottom of the graph. When I see the slow stochastic and its red moving average hugging the top of the range on a year long chart my experience says "Don't buy." You might think, "But the news is terrible!" The news is always bad near market extremes and traders are projecting the current worrisome trend into the future. Note that gold and mining stocks also peaked overnight going into Friday. October gold futures hit $1,358.60 at 12:25 AM then closed Friday afternoon at $1,347.40.

 

 

 

 

 

 

 

 

 

 

fant 2fant one

 

 

 

 

 

 

 

 

 

 

 

 

The oscillators and patterns I use are pointing toward a top in gold. If it works out that way then what should we expect? On the left is my long standing wish for gold. This would imply a sell off, rally attempt then final low for the cycle. The lines drawn in on the right side chart imply that the 2015 low will be the major low. Any pull back will be part of a consolidation before another major surge higher.

 

 

 

 

 

 

 

 

 

ag lie

 

 

 

 

 

Silver didn't do much relative to its fans' expectations. People I know who love the stuff keep telling me that physical demand is strong and that it is close to a big up move. Right now it is having a hard time staying above $18. For most of my life a price above $10 was rare. When I hear the radio spots talking about how cheap it is I have to laugh.

 

 

 

 

 

 

 

 

 

 

 

 

rankoex

 

 

 

 

One of my charts above shows a gold and silver mining company index and an oscillator keeping track of weeks when it ranked in the top 20 among industry groups over the last ten weeks. The lower line is the same oscillator. The blue line on this chart plots the weekly lows of the S&P 100. I wanted to see if stock market lows coincided with peaks in enthusiasm for gold mining shares. It turns out that this is frequently the case. In some instances, oscillator highs were nearly coincident with stock market lows.

 

 

 

 

 

 

 

 

 

 

 

 

corrections

 

 

 

In the case of our stock market, there is a lot of worry about a September - October crash and what might happen Monday on the anniversary of the religious attack on the U.S. but major indices are close to their all time highs.

I read Martin Armstrong's blog. Recently he showed a picture of the N Korean leader watching one of their missile launches with a computer screen in the photo tuned to financial markets He noted that Kim could enjoy the disruption to markets that he is causing. For this reason and the anniversary of 9/11, Monday could be a peak anxiety session.

 

 

 

 

 

 

 

 

 

 

 

s&p sdow jones s

 

 

 

 

 

 

 

 

 

 

 

nya snas s

 

 

 

 

 

 

 

 

 

 

 

 

 

Let's look at the anatomy of the stock market sell off in terms of the major market averages. Yes, below the surface there are a lot of stocks declining that are not captured in the popular measurements of performance. This means that if you have a broad portfolio your return probably looks poorer than the charts above. The popularity of "indexing" may mean that your returns look just like the chart of the S&P 500 above. All the patterns feature an initial three leg decline that I labeled a,b,c. Following this pattern is a three part move back up toward the highs. For chart wonks, this implies that the current set of downs and ups are part of a correction in an on-going up market. Chart patterns, trend lines, moving averages and oscillators are all about probabilities, not certainties. So far, the patterns are saying that there is probably at least one more stock market rally in the future before a major sell off.

 

 

 

 

 

 

 

 

 

83

 

 

 

 

 

This is an example of a complicated correction from the past where there was an initial three wave down move to point a followed by additional strength then a more vertical sell off. If the world does not blow up on the day or night of 9/11 then we could see a relief rally that sets us up for weakness going into October.

 

 

 

 

 

 

 

 

 

 

 

 

 

xlf 4

 

If we live through the next two days, one group to watch will be the financials. Above I featured charts of the bond market showing the recent rally. Bonds going up means interest rates headed lower. Financial institutions are in the business of renting money. When the price for money is very low, the spreads and profits for dealing in money also go down. After the election interest rates went up in anticipation of tax cuts, a robust economy and the end of Central Bank meddling. Disappointment followed. On top of that, many think that the storms imply more Fed stimulus, not less so bonds shot higher over the last few weeks as part of the whole "bomb shelter" mentality. Going into Friday we saw a reversal. If Florida exists and crazies around the world don't do much for 9/11 we could see more of a sell off in bonds, higher rates and a rebound for companies that deal in money.

 

 

 

 

 

 

 

 

 

 

oil tri

 

 

 

 

I am beginning to suspect that Crude Oil is consolidating for another move higher. Please understand that this goes against my deflationary natural way of looking at things. On weeks when it goes down they have guys on TV talking about U.S. production and how OPEC is finished. On weeks when it goes up they put on analysts who talk about the short life of the fracking oil fields, record demand for gasoline, OPEC cut backs and a rebound in world economies. No one knows what is going on. The next time we get above 52 I am going to bet on 62 as the target.

 

 

 

 

 

 

 

 

 

 

 

abdCCZ

 

 

 

 

 

 

 

 

 

 

 

 

 

Talking my positions again: I have been trading in and out of NIB, an ETF that tracks Cocoa (left chart) and DBA, an ETF that tracks agricultural markets using peaks and valleys on a 60 day slow stochastic oscillator. I am out of both going into this weekend. Cocoa could be making one of those contracting triangle forms for a final plunge into an historic buying opportunity. If it hits the skids and drops below the lower trend line I will be preparing my buy orders. We are at U.S. harvest season after a decent crop year and prices reflect the bounty. I would like to see one more minor sell off in DBA then I will reload.

 

Strategy for the next two weeks: It seems that we are at peak anxiety going into this weekend. Will N. Korea or terrorists do something on 9/11? As I write this, Irma is moving to the western side of Florida so the worst scenario of it tracking right up the middle of the state won't be realized. Between midnight and 2 AM on Friday morning many markets peaked and sold off into Friday. If there is nothing extreme Monday or Tuesday I expect the "flight to safety" trades; gold, bonds, Yen, to back off, the Dollar to rally and stocks to get a bid. Remember the 1983-84 chart above. Any relief rally could be part of the topping process.

 

Best of Luck,

DBE