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.
Please remember, the following is pure speculation based only on my experience and chart patterns. "Every sunken ship has a room full of charts."
David Bruce Edwards
Sept 27, 2025
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.
As usual, I will show pictures and graphs found on Zerohedge.com, Sentimentrader.com, which include the Seasonality charts and charts made on Barchart.com. I will also mention "cycle low timing bands" suggested by another market website to which I subscribe, Cyclesman.com.
The Fed lowered overnight lending rates to banks by one quarter of a percent. The new range is 4% to 4.25% shown by the yellow shaded area on the yield curve graphs. The market was hoping for a half a point cut with stocks rallying recently in anticipation of at least a quarter. The left side shows the curve from one month to 30 years. The right side highlights shorter term rates. The 30 year graph includes a green line reflecting rates after last years September rate cut and a red line showing the curve when analysts were all expecting higher rates around President Trump's inauguration. When the Fed cut overnight rates last year, it proved to be a low in rates from 2 years duration and longer. Everything to the right of two years rose. The reason given for the 2024 rate cut was concern about the jobs market. In August of 2024, some labor market statistics looked soft. Inflation was running at around 3% and above the Fed's 2% target. Now, we have "deja vu all over again" in 2025. The last two monthly jobs reports showed less gains that anticipated and three weeks ago, New Claims for Unemployment benefits spiked. At the time I wrote that the aberation was in Texas and likely to be a one time thing. The blue line shows this week's rates and they are higher than they were two weeks ago when analysts were predicting month after month of rate cuts. Within the last two weeks, our Treasury auctioned off tens of billions of bills and notes. This means that they borrowed tens of billions of Dollars. A 20 year bond auction went very well with OK foreign demand and extremely strong domestic demand. A 2 year, 5 year and 7 year auction had a big drop off in foreign demand and bid to cover ratios that were below the 6 month average. Demand from domestic institutions was strong. This indicates that U.S. money managers are worried that money market fund rates will fall so they are moving out the curve to lock in current yields. The lack of foreign demand is troubling. Usually, depending on the duration of the bonds, foreign funds take down between 50 something % and 70 something %. For years, wealth from other countries supported out of control U.S. deficit spending. It was thought to be part of the surplus deal. We would allow other countries to run huge trade surpluses with the U.S. and they would take the wealth gained from unbalanced trade and plow it back into our debt, knowing that government spending would keep the U.S. humming and the consumer buying imported goods. Are we seeing the flip side of tariff policies designed to reduce the trade surpluses of countries that have been supplying us with cheap goods for decades? If it continues, who will buy the hundreds of billions of Dollars we borrow every month?
So, we got our rate cut. Will economic statistics support the Fed's decision or will they do what they did in 2024 and make the Fed's anxiety about jobs look short sited?
Headline Retail Sales (left) rose by 0.6% last month with the year over year reading hitting 5%. The green line on the left side graph shows the "Core" number that subtracts sales from food services, car dealers, building materials and gas stations. It was even stronger at 5.9% year over year. If inflation is roughly 3% then these numbers are still OK. The strongest segments were on-line sales, new cars and clothing with "back to school" helping the last category.
Total Industrial Production (left) rose a small 0.1% with the annual reading falling to 0.9%. The Manufacturing segment (right) was up 0.2% month over month and 0.9% annually. Manufacturing is only 14% to 15% of the economy.
Surprisingly, the index for utilities (left) fell 2% in August, probably because of unseasonably cool weather in some of the country. There was no sign of the big demand from data centers that we hear about all the time. Capacity Utilization fell a bit to 77.376% (right).
Housing starts and permits (upper left) were both down significantly. The good news is that mortgage rates fell in anticipation of lower rates in September and prospective buyers flooded financial institutions with mortgage applications (upper right) hoping to lock in what proved to be a temporary low in rates. Those rates rose a bit over the last week.
With rates temporarily lower, new single family home sales surged as shown by the green line on the graph to the left. Most of the sales were in the south, aided by generous give aways from home builders. The activity was in very high priced homes. Existing home sales (orange line) were quiet as were pending home sales (red line). The price of existing homes is still above new homes with both rising last month. I heard an analysts on TV say that lower rates would result in lower prices for homes because the differential between existing mortgages and new ones would shrink, making it easier to sell the old and buy the new. If rates fall farther and more people are coming into the market to buy, why would anyone lower the price of their property?
We got the second revision of 2nd quarter GDP which rose to 3.8% after consumption (spending by you and I) was revised higher. The number sounds great but remember, most of it was from a drop in Imports which is calculated as a plus in the equation. The headline number on Durable Goods was 2.9% but if you subtract Boeing orders it was up 0.39% monthly and 3.6% year over year which is an OK number.
After the Texas one week spike, New Claims for Unemployment benefits fell back to 218,000 (left, green line) with the non-seasonally adjusted number (blue) even lower. Continuing claims (red line on right graph) fell as did the four week moving average for new claims. No sign of labor market distress here!
At the end of last week we got the Personal Consumption Expenditure readings. The numbers were right in line with expectations. The headline (left) was 0.3% month over month and 2.7% annually. The Core reading (right, less food and energy) was up 0.2% for the month and 2.9% for the year. A few months ago, these readings would have been thought of as "progress" but still too high for the Fed to start cutting. So, what changed? Wall St. wants rate cuts to keep the upward momentum in stocks so their analysts went from worrying about inflation to pushing for a rate cutting cycle.
The Super-core (services ex-shelter on the left) rose 0.33% last month and 3.4% annually, a hot number. The component driving the increase was higher fees from money managers who think you are so convinced that your future lies with higher stock prices that you will pay them more to tell you what to buy. If that isn't the sign of a top, I don't know what is. Income and spending (right) came in at 0.4% and 0.6%. Because spending was greater than income, the savings rate fell again.
I am going to do something different this week and focus on a chart pattern that I often mention, an Elliott Wave Triangle formation. I am doing this because chart configurations in some of the most popular markets look like they are making triangles and people have their financial futures linked to these markets.
The importance of triangles is that they are usually the next to the last series of moves before the final burst higher in a bull market and lower in a bear market. To the left is a somewhat fuzzy picture from one of the best books written on the topic, Frost and Prechter's, Elliott Wave Principal. I read it and memorized all the patterns and ratios, rules and guidelines back in the 80s. The drawings on the left show idealized triangles in a bull market. The right ones are how they form in a down market.
With commodities like gold and silver, it is impossible to predict the ending point of the final burst higher. When most things get more expensive, we buy less and if we own it and see that someone is willing to pay a lot for it, we think of selling. Gold, silver and now our stock market work differently. The higher and more rapid the price gain, the more attractive it becomes to speculators. I worry that some of the following markets are displaying that characteristic now. After the burst higher comes a reversal. Sometimes the price comes back to the zone of the triangle then resumes its advance. Other times, the triangle precedes a major top and for the first time in months or years, "buy the dip" doesn't work.
On the left is a graph of silver from September of 2019 with weekly bars. It traced out a series of moves that fit nicely into the triangle camp. I have found that when a market bursts higher following a triangle, it often makes one or more smaller triangles as it tops. Silver made a smaller one in mid-September then two more potential little ones into last week. Silver has a history of sharp spikes into tops followed by equally quick sell offs. Remember, a sell off, even a large one could be a correction before another rally phase.
On the left is a graph of the daily spot price of gold in NY with the percent change in the U.S. Dollar Index added. By doing this, I remove the currency change effects and get a better picture of the metal's pattern. Look at it, then compare it to the textbook page above. Following a triangle, markets make a quick five wave rally into a final high. While it is impossible to pick a top, experience tells me that we should be close. On the right is a close up view of the trading in December gold futures. It looks like another little triangle formed last week. So far, the burst higher did not take out the previous rally peak. It might do so next week, but if it falls beneath the triangle instead, it will be a sign of weakness.
On the left is a graph of platinum futures. I drew lines and a,b,c,d,e around the formation and labeled the subsequent 5 wave rally. Based on this count we should be near the top. On the right is AIQ, an ETF that tracks companies involved in Artificial Intelligence. The triangle correlates well to the middle one on the left from the text book with the high of "b" exceeding the original top. Last week, shares retreated.
Here are two from last time. On the left is the December Dow Jones futures contract and on the right, an ETF that tracks the Russell 2000. The Dow traced out a series of overlapping moves to a new high. Sometimes this is the sign of a weak market, about to hit the skids. It could also be just the first wave higher followed by a funky correction. If so, then we need to see some good upside action early next week. A break below the green line would look bad. It was the same for the Russell 2000. The move was a bit more vertical but nothing inspiring and we had a large sell-off. If this is just the first leg up with a wave 2 correction before a 3 up, then we need strong follow though to the upside next week. A break of the green line will tilt the odds towards a good sized top.
Triangles can also form in a down market. Soybeans might be giving us an example. The left side graph shows the big picture. Bean prices rallied off a low last summer and are giving much of it back. The sell off could be close to finishing. On the right is a close-up of the recent action. The ups and downs look like the triangles shown on the right side of the textbook. If it works out we should be close to a thrust down and reversal to the upside. Early October is often a seasonal low in beans so the timing is appropriate.
Warning - Sometimes triangles don't work out as planned and a market keeps on going higher or lower. Among chart formations they have some of the highest probability of working out but there is no such thing as a 100% result with anything in the stock market or commodities.
Over the last couple of months there was a universal chorus among analysts singing "Dollar Lower." In my last two updates I noted that this usually leads to a rally and indeed, that is what we got. As you can see from the yield curve graphs, the cut in overnight lending rates did not do much to help longer dated rates. All it really did was lower the government's cost of issuing very short term T Bills, give banks and financial institutions an excuse for paying you less on your money market funds and lower borrowing costs for hedge funds that tend to borrow on the very short end of the curve to finance speculation in the markets. A big factor in last week's Dollar rally was the intrusion of Russian jets into NATO territory and a meeting where NATO members told Russia that they are going to shoot down jets that come over the border. This was followed by Russia saying that if someone shoots down their jets it will be the beginning of WWIII. President Trump then encouraged NATO members to shoot down the jets and said he thinks Ukraine can win back all of its territory lost to Russia. Lastly, high ranking U.S. military officers from all over the world were ordered to attend an in-person meeting at the Pentagon. None of this looks good for the future and for Europe in particular. Would you want all your wealth in a currency that is based in a part of the world where the future weather forecast is "Cloudy with temperatures of 5,000 degrees F?"
Analysts say the there will be a glut in crude oil next year but any news that hints of war sends the price higher. President Trump is trying to punish countries that buy Russian Crude. If successful, it will create more demand for non-Russian oil. Natural Gas even firmed up a bit on the news. Stored Natural Gas supplies in Europe would be the first thing to be targeted in a war. During a period of conflict, you cannot have enough energy.
Best Guesses -
Stocks - The contracting triangle formations are convincing enough to keep me out. Then there is the graph to the right with the purple line showing the difference between the weekly S&P 500 and its one year moving average. Would you want your kids' education fund to be filled with stocks bought at red arrows or red stars?
Bonds - The Fed cut didn't do a lot for longer dated bonds. A worldwide flight to safety due to conflict or stock markets selling off will give them a bid.
Dollar - We got our rally but it could be part of a sideways correction that runs out of steam as it approaches the first rally peak. For now, it looks like a higher Dollar over the next month..
Gold and Silver - The triangles have me worried that we are hitting an emotional blow-off top in the near future. All markets are "sells" at a certain price, and that is true for gold held by Central Banks.
Commodities - Commodities will rally if it looks like war is coming. Consuming countries will want to get as much supply on their side of the oceans as they can.
Best of luck,
DBE