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 13, 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.
If you follow chart patterns, sometimes you see a real life chart that looks just like a classic textbook formation. The graphs above are examples. On the left is a two hour bar chart of the Dow Jones Industrials from mid August. The downs and ups, marked a,b,c,d,e can be seen as a contracting pennant or, in Elliott Wave terminology, a contracting triangle. They usually (but not always) lead to a final burst to new highs then a reversal. It could be that last week's rally above the formation was just the first leg of a larger final thrust to new highs or it could have been all of it! A move below the a,b,c,d,e area would be strong evidence of a change in trend to the down side. On the right is TNA, an ETF that tracks the Russell 2000 index of smaller companies. It made a similar pattern starting in early September. As with the Dow Jones, last week's up move could be just the first leg. The pull back into Friday's close could be wave 2 of a 5 wave up move that completes the pattern. A break of the triangle would imply stronger downside action.
In Elliott Wave mysticism, triangles form after a market had a good run and traders start worrying that it is over-bought. As it moves sideways, emotional tensions build. Commentators are bullish and looking for higher prices. Finally, some piece of news hits the airwaves and those who were watching, hoping to buy on a pullback are suddenly convinced that they have to buy NOW! Here are some of the key economic numbers that convinced those on the sidelines to jump in at record highs.
On September 5th the BLS reported a gain of 22,000 jobs for August and revised the June numbers to negative along with a lower July number. Two weeks ago I mentioned the state by state reports that were negative for June and wrote that this would show up in the revisions. Analysts were expecting the same thing. More and more people are working multiple jobs (right) as full time employment gets harder to find and they scramble to make up for it with multiple part-time positions. On September 9th, the BLS came out with its annual statistical adjustment to the number of jobs created over the last year. The revision was a startling 911,000 jobs that were previously reported as gains and were now gone! For months, employment analysts have been warning that the government's official numbers overstate what they were seeing in the real economy. They turned out to be right. The reaction in the bond market was certainty that the Fed will cut rates in September and in future months to stop unemployment from rising. Rates (on the short end) fell.
Earlier in the week, a report on job openings (left) showed a drop. For the first time since COVID the number of job openings fell below the number of workers looking for them (right). After previous reports, analysts said that we have never had a recession when the number of job openings was greater than the workers looking for employment. Things are changing.
So, with the jobs picture running cold, the only thing standing in the way of the Fed cutting overnight lending rates to banks was a jump in inflation. First to be released were Producer Prices. The Headline (left) number was negative at 0.1% which took the year over year reading down to 2.6%, in the range of readings over the last 8 months. The Core (right) PPI which excludes food and energy also dropped by 0.1% and the annual fell to 2.8%. As with the Headline reading, the Core was within the recent range. All these numbers came in very close to analyst's expectations.
Next, we got the Consumer Price Index (left) and it was not as accommodating. The headline monthly increase was 0.4% and the annual rose to 2.9%. The Core number was nearly as bad, rising 0.322% from last month and 3.059% on an annual basis. Note the upward action on both lines over the last four months. But, was this enough to slow down Wall Street? Not at all. Two months ago, the conclusion would have been that the Fed was correct in being cautious and they were likely to do nothing at their next meeting. Because of the jobs revisions, Wall St. came to the conclusion that "inflation be damned," the Fed will cut fifty basis points in September with additional cuts thereafter. Jobs are now the priority. Stocks soared.
Why did the market ignore the "hot" CPI numbers? Because at the same time the CPI data hit the screen, the weekly new claims for unemployment numbers came out and they soared to 263,000, a number not seen since the COVID days of 2021 (upper left). The four week moving average (green line, right) hit 240,500 while continuing claims hovered in their recent range. Analysts who look at the state by state statistics spotted the out lier which was Texas (directly to the left). They reported an increase of around 15,000 more initial filers for unemployment that in the previous week. No one could find a specific source or employer with announced layoffs matching the reported number and it is likely to not be a recurring item. Traders didn't care about the details. In today's thinking, a weak economy = the Fed lowering rates = increased liquidity in the banking system = BUY EVERYTHING.
Once upon a time, when the jobs market started to weaken, portfolio managers worried about how it would affect consumer demand. 70% of our economy is based on it. In past cycles, people cut back on spending when the future looked less certain. This was reflected in future earnings which came in less than expected. If stock prices are based on earnings expectations and the economy is slowing, is it really time to buy?
This is the "either/or" in the markets. The bullish camp says, "Fed to the rescue. Everything will be fine." The cautious camp says, "Stocks are priced for perfection, the economy is slowing and in past cycles, stocks sold off once the weakness became apparent even if the Fed cut rates."
On Thursday afternoon we got the latest Federal Deficit number for August. This included nearly 30 Billion Dollars from tariffs. The Federal Government spent 689 Billion Dollars and took in only 344.3 Billion Dollars leaving the government with a 344.7 Billion Dollar shortfall. This is just for one month! August had 21 business days. Our Federal Government had to borrow 16.414 Billion Dollars per business day to pay its bills! Are you one of the people protesting modest spending cuts? Interest expenses on the debt keep rising (right) in absolute terms and are near their peak in terms of taxes. Trillions of Dollars of our government bonds are owned by entities in other countries. The interest payments on these bonds are exports of Dollars out of the country.
In the spirit of the times, consumers added another 10.476 of debt to their credit cards in July, the last month of available data. The moratorium on student loan payments is now over so millions of borrowers will be on the hook for monthly payments that have been going to other things. This is kicking in just as the jobs market is looking weak. A rational assessment of the public and private spending is that it will never be paid off. It will be written off. Those who lent the money will be forced to settle for pennies on the Dollar or nothing at all.
The orange line shows the latest yield curve. The green line is the curve immediately after the Fed cut last September. Rates on the very short end of the curve finished the week below last September's lows. Everything else is trading above, especially longer duration bonds. This reflects investors' concern over our still elevated rate of inflation and competition with other major economies for borrowable funds. Longer term rates on government bonds worldwide, are rising as investors become more concerned about the lack of any intention to reduce spending. Rising yields in other countries means that there is a fight for money that will only intensify. The right side chart shows the rate history on the most widely traded debt in the world, the U.S. Ten Year Note. Rates hit the lower trend line last week. If they fall below the blue dashed line it will invalidate the contracting triangle pattern and give us hope that rates on some of our longer dated loans, such as mortgages, are headed lower. Analysts are looking at the spread between the green line on the left chart and the orange line and worry that a rate cut in overnight lending won't move longer dated rates lower. Some are predicting that if the economy shows more signs of weakness the Fed will panic and start buying longer dated Treasuries to artificially force rates lower.
All analysts I listened to over the last two weeks, both mainstream and alternative podcasters, say the Dollar is going lower. They site the precarious state of our deficit amid a slowing economy, the administration's wish to export more stuff and the likelihood of the Fed cutting rates. Despite all of this, the Dollar Index finished the week above its July lows. The arguments for a lower Dollar are compelling but most of the rest of the world is in worse trouble than the U.S. The left side graph shows the Dollar from its recent peak. It traced out two down legs of approximately the same length, a common form for a completed correction.
The two graphs above are related. The left side shows the path of spot gold in NY and the daily closing price of the Dollar Index, inverted. When the red line goes up, it means the Dollar is going down. This points out the correlation between a weaker Dollar (which everyone thinks is going to get weaker!) and gold. The right side graph shows the daily bars of spot gold in NY with the percent gain or loss in the Dollar Index added. You could have a few days when gold goes up a percent and the Dollar drops a percent. On a regular chart of gold, the bars would show a higher price for gold. On the Dollar Adjusted chart, there would be no upward movement because the sell-off in the Dollar would offset the rise in gold. This chart only shows higher prices when gold goes up without the Dollar going down. The pattern matches a textbook contracting triangle, the same as the first two charts above with an upward thrust from the completed a,b,c,d,e. Once finished, a major reversal should follow. It is impossible to predict the size of a post-triangle thrust. Some barely exceed the sideways trading before reversing and some have an out sized blow-off type move. One theoretical target is for the thrust to travel the length of the widest part of the triangle which is the distance between the original top back in April and the "a" point. Last week's high matched this.
In the spring I warned that gold mining stocks and all others things "precious" would be "discovered" in the later innings of a gold rally. Newmont is one of the largest mining companies and is heavily weighted in gold mining ETFs. It went vertical after a good second quarter earnings report. A friend sent me an analyst's report on the company. I visited gold mines and became very familiar with their operations over a 17 year period, working for a major Swiss gold refining firm. This analyst knew the variables that go into gold mining. He pointed out that much of Newmont's better cash flow was due o deferred spending on necessary mine maintenance. He also noted that Newmont's ounces of gold produced per share are falling. We will see if they spent more this quarter when they report results.
Silver made an almost perfect five wave advance from its April low. I say, "perfect" because waves 1,3 and 5 all have smaller 5 wave moves within them and waves 2 and 4 alternated in their shapes. The same analysts who dismiss the Dollar, love silver and gold. On the right is an update of the weekly closing price for silver, its one year moving average and the difference between the two in blue. Are you better off buying at a red dot or a green one?
Platinum and Palladium firmed up a bit with gold making new highs. Both metals usually sell off into October then bottom by early December. They are also sensitive to the direction of gold and the stock market. There is a flood of bullish articles on both metals, predicting much higher prices into next year but most of these came out after the metals had a big move. Analysis tends to follow price so you always have to greet the most logical reads with some skepticism.
On the left is a graph of the daily bars of the most active WTI Crude Oil contract. Prices are sitting just below a previous support zone. On the right is the daily closing price of XLE, the big energy ETF along with crude oil. Do you sell oil because the world's economies are slowing and OPEC + is increasing production or do you buy it because wars are coming that will disrupt crude oil exports and predictions that we are at peak supply from the Permian Basin? Lately, traders bought companies in the energy patch based on optimism over a stronger economy in the U.S. that will require more energy. This positive outlook diverged with the price of crude. Conoco announced big layoffs. We are left with the possibility of war and shortages versus the current reality of a well supplied market.
On the left is an update of my weekly closing of the S&P 500, its 40 week moving average and the difference between the two. The idea is to buy in red arrow territory and lighten up in red star territory. Lately, there has been more discussion of "passive inflows" and corporate buy backs keeping the market afloat despite record valuations. Millions of people have their retirement programs invested in S&P 500 Index funds and their regular contributions go directly into these programs. The top five companies in the index, Nvidia, Microsoft, Apple Inc., Amazon and Meta make up 23.69% of the index so nearly a quarter of the money in passive index funds automatically goes into these stocks. The same names have multi billion Dollar buy back programs supporting their shares. A month before earnings, there is a corporate buy back moratorium until earnings releases. It starts for many companies next week so the market will not have that support. The question is - what will make investors think twice about their automatic allocation to index funds? The contracting triangle formation on the Dow Jones Industrials could be telling us that we are close to the event that triggers it. My chart of the week is Oracle. On Tuesday evening they announced their latest quarterly earnings. They fell short of estimates in terms of both revenue and profits. But, they announced a huge recent gain in clients then presented a bar chart projecting those gains in linear fashion into the distant future. Investors loved it and the stock rose $100 a share the next day. I only found one or two analysts who pointed out that projecting near term gains into the unknowable future is not a good basis for buying shares $100 higher than they closed the night before. By week's end, investors who were sitting on big gains started taking profits. Frequently, at tops and bottoms there is a news event that captures the emotion of the times. In a down market, it is the last bit of bad news that finally convinces those who were holding on to dump shares. In an up market, it is an event like this that pushes people to buy into an already over-valued market.
The love for Oracle spread out into the chip sector, however, Nvidia failed to make new highs. This is worth watching because it is so heavily weighted in the S&P 500. Money managers are beginning to diversify into other chip stocks that are working on chips that will erode Nvidia's market share. Analysts of the sector say that CapEx spending for data centers is likely to peak in the next year. Nvidia's price action could be reflecting this.
The tech sector is once again the king of the hill, concentrating much of the world's wealth. The NASDAQ 100 hit new highs relative to the Dow Jones Industrials and every other index. Some money managers consider these stocks as "defensive" plays in the sense that development of AI will keep up with its current pace even if the industrial and service part of the economy slow down and unemployment increases. This seems like a shortsighted opinion because companies invested in AI are depending on future paying customers. They will always have the defense department but most companies that adopted AI are reporting limited gains attributed to it. While good, they are less than anticipated. Sometimes business trends are peaking at the exact moment when analysts are increasing the estimates of their growth. This is similar to sports superstars being on the cover of Sports Illustrated. Keep a close watch on news about data center plans.
DBC, a broad-based commodity ETF and DBB, one focused on industrial base metals (zinc and aluminum heavily weighted) both held their 200 day moving averages. Lately, talk of a commodities super cycle picked up. Iron Ore firmed over the last few weeks. Much of this has to do with China. Their government is desperately trying to pump up their economy. Last week, there were reports that the central government is going to bail out local governments that are drowning in debt. Analysts who are bullish on commodities are also great believers in the coming recovery in China.
Are there any markets that are not over-bought and priced for perfection? Yes. Grains and Natural Gas. The news around them is all bad. I was in Wheat and Corn growing country last week and I have never seen it as lush and green for this time of the year. The USDA released late season reports on crop quality and acreage on Friday. Yields were trimmed slightly but planted acreage numbers were higher than earlier estimates. The U.S. continues to negotiate with China on trade. Hopefully this will include more grain demand but China has made it clear that Brazil is their favored vendor with investments in the country's grain infrastructure for storage and transportation. Corn, wheat and soybeans rallied a bit after the report as shorts decided to take profits. Natural Gas is in one of its worse periods of domestic demand for power generation. Daytime temperatures are down a bit so air-conditioning demand is too. Nighttime temperatures are not low enough to turn on the heat. In New England, where I live, it is a point of pride for many people to hold off using their heat for as long as possible. Prices rose from multi-month lows a couple of weeks ago then fell back a bit last week on the weather outlook and continued strong production. With prices for these commodities near lows, the risks in buying are also low but that is not the same thing as saying they will have strong rallies. For grains, we really need some bad weather around the Black Sea and in Australia along with a dryer summer here in the U.S. next year. Nearly every winter has a cold snap where a front plunges south over much of the country and Natural Gas prices spike. Nothing is on the radar yet, but traders know it is coming.
Best Guesses -
Stocks - The contracting triangle formations favor a nearby top. If we did not see it last week, it should follow shortly. Watch the Dow Jones pattern in particular. The bullish interpretation is that we finished wave 1 of a larger 5 wave burst higher. Friday's pull back is wave 2 with a big wave 3 up, coming next week along with the Fed cutting rates. Bears think that last week's burst higher was the top and it is down hill from here.
Bonds - A cut on the short end is priced in. Watch 10s, 20s and 30s. If they fail to rally after the cut it will tell you that the concept of lending to governments is in danger. I would not be surprised if Chairman Powell is anticipating this and hints at the Fed buying longer dated bonds to juice the market.
Dollar - Again - Too many analysts are assuming it will sell off. I look for it to bottom and have a "surprise" rally.
Gold and Silver - I am looking for a top. The triangle and burst higher on my Dollar Adjusted graph looks complete. Mining company shares are extended.
Commodities - Warning - I am talking my book. After 7 good years come the 7 lean years. In grains, we are due. I am a Natural Gas fan. Winter is coming.
Best of luck,
DBE