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 July 29th, 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.

 

 

viX 8

 

 

 

 

 

Last time I finished with a VIX chart and a commentary implying that markets were pricing peak performance into the indefinite future, an unsustainable thing. The VIX traded below 9 as investors of all stripes loaded up on equities. All it took was a few bad days at the track to wake people up to the risk associated with markets. The VIX nearly doubled.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

87 ghost

 

You are likely to hear a few things having to do with "7" in the financial news. Years ending with "7" produced some good down moves in past cycles with 1987 being the example for "crashes out of nowhere." The fourth quarter earnings of that year were great! As with this year, the market rose relentlessly throughout the year with very little back tracking. It peaked on August 24th and the rest is history.

A well known past event is rarely duplicated. Fear of that event will cause a different form. It could be that we sell off, stabilize then begin to sell off again in September and early October as fear builds around a 1987 scenario. Mid October might be the next good buying point, just as talk of the 1987 crash hits fever pitch.

 

 

 

 

 

 

 

 

 

 

 

spx 8

 

 

This and similar charts are from the Investools.com web site to which I subscribe. I very much like the layout and display of their graphs and indicators. Last week's market jolt was similar in form to previous short term shocks that were quickly erased. Optimism and levels of cash in investors' accounts were at high extremes for the first and low extremes for the second. That would imply a larger correction. Trend line watchers will note that the upward sloping line did not hold last week. The first support is at 2,410 at the lows of the last sell off. If this is a correction of the entire up move since last November then April's congestion area near 2,330 on the S&P 500 would be the target.

 

 

 

 

 

 

 

 

 

 

 

nas 100 8

 

 

 

There is no neutrality in my analysis. I shorted the most successful market index, the NASDAQ 100, four weeks ago. So far it formed a sell off, consolidation and another sell off. Often that fits well as a correction in an up market. The pattern does not have "the look" of a typical zig zag correction in an up market. This is an extremely subjective observation based on years of chart gazing. The form looks like it needs more down side. Remember, big funds had to load up on these stocks to keep up with the performance of the averages so when they decline portfolios take an out sized hit.

 

 

 

 

 

 

 

 

 

 

 

 

az 08go 08

 

 

 

 

 

 

 

 

 

 

 

 

 

The two poster stocks for the unbreakable market, Amazon and Google, both backed off of their highs recently. When Amazon hit its peak Jeff Bezos was the richest man in the world. Business stations, sports talk programs and morning drive talk shows all mentioned him that day. I should have known it was a bad omen.

 

 

 

 

 

 

 

 

 

nya o8

 

 

 

Most stock market corrections have more than one leg to them. Even some that look like a single swift move on a daily chart were more complicated when seen on an hourly basis with some kind of sell off, rebound then additional decline. The odds are that this one will be similar. Money managers are probably thinking that if we can get through this weekend without a war then stocks will quickly rebound. Markets are about confidence and emotion. Technical measurements of this market's health have been deteriorating for a couple of months. War talk was just the catalyst to tip it over the edge.

 

 

 

 

 

 

 

 

 

 

 

 

r tri o8

 

 

 

The Russell 2000 is made up of smaller companies. It went straight up after the election because it was thought that tax cuts and the repeal of Obama Care would work wonders for smaller firms. The repeal of Dodd-Frank was another boost since this index includes a lot of small banks. As the Trump agenda stalled so did the Russell 2000. Here is something to watch. The movement within the red lines could be tracing out an expanding triangle form. The text book version of it would call for a decline back to the lower red line. Following that, prices would rocket to new highs in some kind of final blow off move.

 

 

 

 

 

 

 

 

 

 

 

gold week 08

 

 

 

 

 

Gold has been trading as the anti-stock market, a safe haven for money in troubled times. Last week there were renewed calls for $1,400 an ounce, a natural target near the dashed purple line. I am sticking with my original form drawn in red.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

day au 08

 

 

 

 

 

One of my targets for gold is $1,305 where the red line sits on this chart. We got to $1,298 last week so we are almost there. My bullish gold bug friends are looking for much higher levels given the weakness in stocks, sabre rattling with N. Korea and typical strength in metals that happens in the fall. We shall see.

 

 

 

 

 

 

 

 

 

 

 

 

 

Ag 08

 

 

 

I almost feel guilty for featuring a silver chart. I am worried that one of my readers might be encouraged to trade it. Since nearly everyone who trades silver loses money I don't want to think that I encouraged the future destruction of some child's college fund.

Last week the metal broke above a trend line but the price level is simply in the middle of its trading range. There is no real "break out." If my modest target on gold is correct then silver is close to disappointing again.

 

 

 

 

 

 

 

 

 

 

 

 

 

mining stocks 08

 

 

XAU is an index of precious metals mining stocks. Even though gold rallied a bit the shares of the mining companies are not doing a lot. The recent pattern is a "coiling" type formation and with any luck it will break to the upside on additional strength in the metals. Mining stock investors tend to buy at the highs and sell at the lows so a sudden pop higher on the stocks with a small additional show of strength in bullion might signal that the end is near for the metals rally and the stock market sell off.

 

 

 

 

 

 

 

 

 

 

 

 

 

the Ps 08

 

 

 

 

Platinum had a good couple of weeks after months of lagging other metals and palladium ran back toward its recent highs. My worry with these two metals is that more weakness in stock markets around the world could get people thinking that a recession is on its way. These metals do well in a good economy and poorly when things slow down.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

tlt o8

 

 

TLT is an ETF that tracks longer dated U.S. Treasury bonds. Bonds are trading in a similar pattern to gold in that they are seen as a safe place to park money in turbulent times. They are a lot more liquid than gold. You can move billions without disturbing the market. Despite talk of Central Banks pulling back from buying bonds they rallied in the face of the stock market sell off and war talk. As with gold they should peak in a coincident manner with stocks bottoming.

Interest rates have been at historically low levels. It is unlikely that this range is permanent. Assets whose trade and value benefit from lower rates should be avoided.

 

 

 

 

 

 

 

 

 

 

 

llod 08

 

 

 

Behind the scenes is the value of the Dollar. Two weeks ago I showed charts for the markets featured above with gains or loses removed from changes in the value of our Dollar. Much of the recent strength in metals, bonds and stocks disappears when you view it in constant dollars.

The world is short Dollars and long Euros. This is a trade that is ripe for reversing. In the last two weeks the Dollar bounced from 92.58 then pulled back at the end of last week. It looks like it is trying to bottom. It will not take a lot of upward movement to cause funds to cover their Dollar shorts and drive the market higher.

 

 

 

 

 

 

 

 

 

 

just 08

 

 

 

 

 

 

This is what our Dow Jones Industrials look like to someone having to price in the recent decline in the Dollar.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

nib 8dba 8

 

 

 

 

 

 

 

 

 

 

 

 

 

Can I talk my position again? Last time I was out of DBA, an ETF that tracks a basket of agricultural commodities and NIB, and ETF that follows the most active cocoa contract. I bought back into both last week when bearish reports knocked agricultural commodity prices down. Did you read that Greenland is experiencing a summer with out snow melting? The temperatures have been colder than normal. It is the same for most of Europe. I want to own food things when the globe is cooling.

 

Plans for the next two weeks: I am hoping that we will all be alive on Monday morning. Even so, I want to see a muted rally attempt then failure in the stock market followed by some kind of downside give up phase by mid to late week. After that I will watch for a better upward correction that eventually fails as fears of October, talk of 1987 and "seasonally September is the weakest month" start to hit the tape. Look for gold and bonds to do the opposite but I wouldn't stick around in them for too long. Think "rent' as oppose to "own."

Best of Luck,

DBE