Coming in October 2013: Dr. McHugh's new book, "The Coming Economic Ice Age, Five Steps to Survive and Prosper."

There is a lot of uncertainty facing markets this September. Who will replace Bernanke? Will the Fed taper its QE4 program, and slow the goosing of the stock market? How will this past Friday's August Jobs numbers affect the Fed's thinking? Will the U.S. go to war with Syria with little political support from NATO, from Congress, from the majority of Americans (per poll results September 6th, an aol.com study showed 76 percent of respondents were against a Syria war), without support of the U.N. Security Council, and not only no support from Russia, but perhaps a war adversary in Russia, which could supply anti-aircraft weapons to Syria against our bombers? I am no political analyst by any means, but I did minor in political science at Villanova University back in the day, with a few Middle East courses under my belt, and must say, this has a different smell than Iraq did. A war with Syria has the potential to draw in other nations that could quickly escalate into something nobody really wants. Russia is a strong ally of Syria. Syria borders Israel to Israel's northeast. Iran is saber rattling if the U.S. attacks Syria, they may join the fracas. What if Israel is attacked? How would they respond? Something like this could initiate the Coming Economic Ice Age sooner than we had hoped. In my coming book, I have an entire chapter on the probability of war contemporaneous with the coming economic collapse, and I wrote that chapter six months ago when I handed the manuscript to my publisher. The book will be available in about three weeks I am told.

This weekend in my expanded report to subscribers at www.technicalindicatorindex.com I show a chart of the Wilshire 5000, which is essentially the entire stock market in one large index, which shows that a Jaws of Death price pattern from 1990 is complete. Because the Industrials need more upside to complete its Jaws of Death pattern, my take is that the Wilshire will crawl along its upper boundary until the Industrials finish their Jaws of Death top pattern. But, what this also tells me is that we have to be on high alert, that there is a chance the Jaws of Death truncates in the Industrials and that Grand Supercycle degree wave {IV} down could begin sooner than we hoped. One out of the previous eight times we saw this pattern in the Industrials over the past century, the pattern's last fifth leg up truncated near the top. So there is some precedent for truncation.

My take is this. If we go to war with Syria without national or international support, and if Russia shoots down our bombers with anti-aircraft missiles, either directly, or freshly supplied to Syria with intent to stop our bombers, then we could be seeing the beginning of World War III, the end of the Jaws of Death pattern, and the start to the Great Depression of the 21st Century and Grand Supercycle degree wave {IV} down. This Syria issue reminds me of the Cuban missile crisis back in October 1962. I was a kid during that, and I can remember the fear we felt during those thirteen days. Back then, President John Kennedy felt backed into a corner, with little domestic congressional or international support. Later we learned he made comparisons of that crisis to the start of World War I, referring to a book known as The Guns of August, written by Barbara Tuchman, Ballantine Books, Random House Publishing, where the world ended up at war, but should not have. Mistakes were made. Mistakes that should not have happened.

If a Syria war goes bad, stock markets could collapse, plunging straight down, a tradable trend, but not the preferred trend. If a Syria war goes like Iraq or Kosovo, if Russia stays out, if our only resistance is from Syria, and it becomes quickly apparent that we will win the war fast, then stocks should shoot higher for the rest of the year.

The point is, this Syria business is a real market driving issue, and clarity should come very soon.

As for the August Unemployment and Jobs number, an interesting development spooked markets Friday. The labor force declined by 312,000 people. This is odd given the robust population growth in the U.S. There are several reasons possible. New retirees could be one explanation, or more folks giving up searching for work because they are so frustrated would be a second reason. This decline in the labor force caused the unemployment rate as calculated by the BLS to remain at 7.3 percent. Empirically, I find it hard to believe this decline was the result of new retirees, because given the massive cost of living increases in basic necessities such as medical, cars and repairs, housing, food, and gasoline over the past decade thanks in large part to the QE Fed programs, how can folks afford to retire, and count on a nest egg that is worth far less in real inflation adjusted dollars today than it was a decade ago. Who in their right mind would retire instead of work in this environment?

The Bureau of Labor Statistics (BLS) reported Friday, September 6th, with a straight face that non-farm payrolls increased 169,000 in August. However, the CESBD report (The BLS' Business Birth/Death model) disclosed that 90,000 of these reported 169,000 new jobs were a guess, a hopeful fantasy of new jobs the Labor Department thinks might have come from new businesses they dreamt may have started in August. We need to create at least 150,000 new jobs each month just to keep pace with population growth. Many of the jobs in our country do not pay high enough wages to support a family. But those below poverty level income jobs count in these BLS statistics.

From the market's perspective, this was a dismal jobs report. It makes the argument for the Fed to not taper its QE4 bond buying program, but to continue to goose Wall Street with cash that probably will not flow anywhere but into the fixed income security and stock markets. So, from the Jobs report perspective, fundamentally, it was probably bullish for interest rates and stocks. We show a Treasury Bond chart in this weekend's report to subscribers that suggests Bonds are nearing a bottom, and could embark on a huge rally starting over the next month or so. But there could be a bit more downside first in bond prices before that bottom arrives.

A Syria war that goes bad would push Oil higher, Gold higher, Treasuries higher, and stocks lower. That is the key unknown this weekend.

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"Jesus said to them, "I am the bread of life; he who comes to Me
shall not hunger, and he who believes in Me shall never thirst.
For I have come down from heaven,
For this is the will of My Father, that everyone who beholds
the Son and believes in Him, may have eternal life;
and I Myself will raise him up on the last day."

John 6: 35, 38, 40