One of our themes for this column is that social mood drives social action. Mod changes literally determine market tops and bottoms.

The rebooted “It” earns the highest compliment of a horror movie. “It” is worthy of the hype. It’s the details in the script, production design, and music that boost the movie to a higher horror movie tier. It is in fact Chapter 1 of (at least) a two-part series. A plea to Warner Brothers: Finish “It” the right way and people will still be paying to watch this movie in 50 years.

Movie Reviewer Peter Hartlaub, San Francisco Chronicle

One of our themes for this column is that social mood drives social action. Mod changes literally determine market tops and bottoms. In my class back in 2008, I mentioned that the popularity of the then current Batman release, "The Dark Knight," suggested social mood was trending negative. Indeed one student had already been to the theater twice to view it. The movie grossed over $500 million at the box office in 2008. This change in mood was the prelude the 208-2009 market meltdown.

A single statistic signifies a mood change underway. When the movie trailer was released, it garnered a world wide 197 Million views, the first day!

There is amazing precedent for this. Horror movies became mainstream far during the Depression with Frankenstein, Dracula, and the Wolf Man. Gangster movies were popular as well such as Cagney’s Public Enemy. All of this would be repeated during the 50% bear market crash of 1973-74. Bonnie and Clyde was released in 1967, right after the Dow topped 1,000 for the first time ever. The Godfather, like It, was released as two movies. The first was in 1972 as the market topped 1,000 for the second time. The sequel would appear near the very bottom in 1974 as the Dow trickled down to 577 in December, 1974.

The Exorcist, billed as the most horrifying movie ever made, was released in 1973, kicking off the 500 point Dow decline.

Can we spot any repeats of negative mood today. Well, let’s count the ways:

Trump angers Republicans with Democrat deal

Republicans anger Trump (zero legislation this year)

North Korea threatens nuclear war

China suggests the US leave the Korean peninsula

China cites US Navy ship collisions as endangering shipping in the Far East (Ouch!)

Riots on college campuses

Often physical events, predict market changes, and now we have both Harvey and Irma in a two week period.

I am not necessarily predicting a market top but this trend in negative mood is all too obvious. Recall that in 2013 as the Dow was climbing to 22,000. "La La Land" was the box office favorite. The positive mood popularizing La La is in contrast to "It," already receiving the highest compliments of a horror movie.

Which brings us to the state of the energy markets. Hurricane Harvey helped lift energy and energy service shares. The turnaround came as Harvey gathered strength off shore August 21. But XLE, the energy ETF, was merely bouncing off its lower trend line. As I write today, Friday September 8, XLE is reversing at its upper down trend line. XES , the energy service ETF, is doing the same. The percent of energy stocks in bullish formation is stuck at 35%. So the hoped for turn around has yet to arrive.

One market in particular has turned around as the DJIA has moved sideways at 21,500-22,000. And that market is gold. Apparently investors are diversifying potential stock market risk buy buying the metal and mining shares. The gold price bottomed after the election in December. Then prices at $1,140 an ounce, it has now risen to $1,350.

Silver has not joined the party trending sideways between $16 and $18.25. The backdrop to the run-up in gold has been the currency markets. Commodity rich economies of Australia and Canada have seen their currencies soar. The Aussie Buck since May has moved from 73.5 to 81 versus the US Dollar Index. In the same time frame the US Dollar has fallen from 101 to about 92.

Usually oil, priced in US Dollars, moves opposite to the Dollar. But renewed shale production in the US seems to be keeping a lid on the oil price. The US is now a net exporter, rather than importer of oil. The OPEC plan to diminish US oil production by lowering prices did not work.

Stocks have shrugged off all the negative news. But trending social mood has me wondering if, as in the past incidents cited, this might change. We continue to monitor the energy markets for any sign of change.

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