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
Oct. 25, 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 spooky stuff first. I frequently mention Martin Armstrong in my updates. Subscribers have access to his computer generated arrays that target days, weeks, months and years when various market cycles indicate inflection points. For months he has been warning that next week is a "Panic Cycle Week" in many of his market arrays. He does not predict the direction. He thinks it means that some international event will cause a spike in volatility for many markets.
With the government shut down there were few official statistics available. President Trump asked the BLS to give us a CPI number. It was important because this month's read on annual inflation is used for cost of living increases for Social Security. It was the emotional focus of data for the last two weeks.
The CPI reading came in at 0.3% for last month and 3% for the last year (left). The Core Number (less food and energy) was 0.227% month over month and 3.019% for the year. Food prices were up slightly again. The investment world was fearing slightly higher numbers but was ready to buy on anything short of a disaster so stock futures rallied on the news. Of course, 3% is higher than the Fed's target of 2% but traders believe that the Fed gave up on 2% a while ago. Analysts are convinced that the Fed has to lower rates at least a quarter of a percent at each of the next two meetings while telling investors to buy stocks because the economy is growing quickly. You don't usually associate Fed rate cuts with an economy that can justify record stock prices but that is what we are being told.
Rent and Shelter inflation continued its march lower (left). Last week I saw a pod cast featuring a real estate advisory firm. GMD BC3 AI Butter Copy TS 16x9 ACT 2217 250916 B They showed maps of many metropolitan areas where real estate prices and rents are declining and they have a free app you can download to check specific zip codes. The numbers that the Fed uses are a few months behind current activity so they expect rent and shelter inflation to keep falling and eventually go negative. On the right is the reading on Services Less Shelter. No one cared about this arcane number until officials from the Fed said it was an important input to their thinking about inflation. It was up 0.29% month over month and 3.3% for the year, trending down a bit over the last few months. Interest rates fell on the news but as the day wore on, longer term rates rose back toward unchanged on the day and finished the week right around Monday's levels.
Existing home sales were up 4.06% from a very low level (upper left). Interest rates were down a bit last month, allowing a layer of buyers to take the plunge. The inventory of existing homes for sale continued to rise to levels last seen before COVID (upper right). If mortgage rates stay around current levels then most market theory would say that existing home prices should start falling. According to REDFIN, prices are already dropping (right), however all real estate is local.
The regional Empire State Manufacturers Survey was very positive (left) with respondents saying things are improving. New orders were up and employment was up slightly. Their prices paid index also rose.
The Fed released statistics on student loan delinquencies. The moratorium ended last month. I was surprised to see that the rate is the highest among middle aged people and older. This graph speaks to the rate of late or non payments. It could be that the balances outstanding for the older groups are a lot smaller than the younger ones. Besides, at 60 plus, what the hell are they really going to do to you for not paying the remainder of your student loan? On the right is a graph showing the make up of groups driving the economy. 70% of the GDP comes from consumer spending and half of that is from the top 20% of earners. This is also the same group that owns most of the assets. You can understand why the Fed and our President are so obsessed with keeping the stock market and real estate prices elevated. Most wealthy people have a three legged stool kind of approach to spending money. The know that their job could be in doubt because of structural changes like AI but as long as their homes keep going up in value or at least, not going down and as long as their investment portfolio is doing OK, they will keep buying stuff. It is no wonder why you just don't hear stock market skeptics featured in the financial media. Everyone wants to keep the party going.
As long as you are willing to play, Wall Street will come up with new vehicles that allow you to bet a Dollar with leverage. The upper left side graph shows the latest count on leveraged ETF products. It was thought that 3 to 1 leverage was extreme. Some outfits are getting approval for 5 to 1 leveraged ETFs. These work great on the way up but hand out punishment when things go south. The upper right side graph is from the Real Investment Advice website, one of my favorites. It shows the current reading on their "Froth Index." Last week we saw the heavily shorted shares of Beyond Meat skyrocket just like Gamestop a few years ago.
The graph directly to the left updates one from last week showing excess bank reserves held at the Fed. In the past, market strategists pointed to the excess liquidity as one reason that the stock market was doing so well. Only a few voices are worried about the drop.
Interest rates fell after the CPI data with analysts convinced that the Fed is in an interest rate lowering cycle despite inflation hovering above their 2% target. The upper left side graph shows the very short end of the curve where most of the rate change is taking place because the Fed cuts are on overnight lending rates to banks. The farther out you go on the curve, the more you have to worry about what will happen in an unpredictable future. Rates on the shorter end of the curve finally fell below the level they hit after the first Fed cut in September of 2024. Longer term rates are above the initial rate cut levels.
Directly to the right is JNK, an ETF that tracks the junk bond market. Last month, two large bankruptcies shocked the credit market. Both Tricolor and Best Brands used the same collateral to take out multiple loans then collapsed. Major financial institutions including J P Morgan were left holding the bag. A couple of weeks ago, two California banks announced huge hits to earnings due to a similar scheme from a real estate company. JNK sold off then recovered last week after analysts rushed to the TV screens to reassure investors that these were isolated cases. You can be sure that every lending institution is working overtime to review their loans and the integrity of the collateral pledged. Over the last five years, Private Credit was a major investment fad for high net worth individuals. Instead of taking equity positions in private companies, Hedge Funds decided to lend them money. To an unsophisticated investor like myself, the question was, "Why won't the bank lend them money?" Investors were told that these loans were illiquid. There was no market for them but you could trust the hedge fund managers' judgment. Now, there are rumors that many of these loans are nonperforming. Because they are "Private," they do not have to be marked to the market. Investors in these hedge funds are getting nervous and asking questions. These funds also leverage themselves by borrowing from financial institutions so problems in Private Credit will spill over into the banking sector. The Fed might lower overnight lending rates but these recent bankruptcies and write downs will result in tighter lending standards which is a de-facto lessening of the availability of credit for smaller businesses. If loans are made, they will be at higher rates. In a postive cycle, loan officers are paid to say "Yes." During a season of caution they are paid to say "No."
Two weeks ago, a sudden sell off formed a weekly swing high in the S&P 500 and some other major market measurements. This was a negative technical move that is usually followed by lower prices. The S&P 500 bucked the trend following some good earnings reports. On Friday, after the CPI data, it posted new highs for the move. So far, the rebound shows a series of overlapping ups and downs. Chart wonks consider this to be a weak kind of rally. If it is any good, it will accelerate next week to form a clean, non overlapping series of moves.
The Dow Jones Industrials made similar moves including the overlapping advance to new levels. Highs in many stocks were made early in the day with little to no progress for the rest of the session and a slight sell off into the close.
The clear winner is the NASDAQ 100 Index and that is because of its heavy weighting of companies involved in AI including the hyper scalers and semi-conductor companies.
You can see the influence of a small number of AI stocks in two ways. The left side graph shows the path of some popular SPDR Industry ETFs. The XLK Technology EFT is beating them all, including Industrials that are benefiting from AI as infrastructure plays. The right side graph shows different market capitalization sectors. The capitalization weighted S&P 500 is the clear winner due to the weighting of AI heavyweights. Analysts tell us that the rally is "spreading out" but other industry groups and parts of the market that don't include AI specific companies look they are losing steam relative to AI. A Sentimentrader.com article, available to subscribers said that within XLE, more and more stocks are diverging from the fewer heavyweight leaders and that corporate insiders in XLE companies are big sellers of their own shares. If we are "just in the first innings" of the AI revolution then why are the top officers in the companies that will benefit most, cashing out of the future we are told to buy?
I did a lot of driving on a business trip last week. On Wednesday I was listening to Charles Payne, a popular commentator on Fox Business. He kept saying that you have to own the companies driving the 4th Industrial Revolution. I was surprised to see that both Nvidia and Taiwan Semi finished the week off of their highs.
This weekend there is a Zerohedge.com article warning about how indebted some companies are getting to participate in the AI future. Billions of Dollar worth of bonds are being issued to finance data center build out. Some of these are zero coupon bonds that sell at an initial discount that reflects the interest you would have been paid on a normal bond plus the additional interest earned if you reinvested the interest payment at the same rate. The reason for doing this is that none of these companies are making enough current cash flow from AI to cover the costs of the data centers. In theory, 5 years from now, when the bonds are due, revenues will increase, however as noted in the last updates, those revenues would have to equal 10% of the country's current GDP to justify the costs. Bond buyers are putting a lot of faith in rosy projections.
Lately, more and more AI skeptics are coming forward such is this guy - Reality Vs Garbage: Has AI Already Lost The 'I' Part | ZeroHedge.
Some computer scientists, heavily involved with AI development are also claiming that increased "compute" is not resulting in more accurate results. Billions are being wagered on future revenue streams that common sense tells you are not likely to be a reality. Lately, I noticed some analysts are shifting their narrative to - "Some of these companies are making investments that will never be recouped but it is too early to know which ones will be winners." Watch the charts of NVDA and TSM.
In a perfect chart-book world, the future of gold would look something like the left side graph. The assumption would be that gold is making a five wave advance following a contracting triangle. The strongest part of the rally would be a five wave move unto itself. We just saw the end of the third wave of the extended third wave. The current setback is the fourth of the third that will be followed by another up leg then a larger correction before a final high. (confusing stuff) On the right is a weekly graph of gold prices following the 1980 blow-off. Everyone thought it would correct then hit new highs. Instead, it corrected then rallied in a five wave truncated pattern that failed to make new highs and the rest is history. When a market captures the trading world's imagination, the reasons for owning it become more compelling as it gets more expensive. Near the end, single phrase justifications capture buyers such as "rejection of fiat money."
When will gold be investable again? The bulls say, "right now." Above are oscillators on the weekly closing price of gold in NY. On the left is a simple 4 week rate of change measurement. Even with the pullback, the rate of change oscillator is near the high of its 10 year history. The right side graph shows a simple RSI momentum oscillator which is still above 0.80. If you knew nothing about all the theories around why gold "has to" go higher and simply glanced at these graphs, would you be in a rush to buy on Monday?
Two weeks ago, every commentator loved gold and silver. Fans of silver began predicting future prices in the $75 to $100 range. On the right, is my Silver vs its 1 Year Moving Average chart. It is still in red dot territory. The current red dot sits at the second highest level on the graph.
The left side graph shows the daily closing spot price of platinum and palladium in NY. They pulled back with gold and silver. In many of these updates last year I advised those who needed the metal to buy while the markets were boring. If gold and silver fade, these metals will likely do the same unless social unrest rises in S Africa or Ukraine drones the Nornickel mining complex in Siberia that produces 40% of the world's palladium and 10% of its platinum. On the right is a weekly bar chart of copper. Despite all the predictions of much higher prices it is not that much better off than it was four years ago!
Crude Oil had a nice rally last week after President Trump imposed more sanctions on Russian oil and tried to stop India and China from buying it. The theory is that if you take Russian oil off of the market, all other oil will be worth more. On the upper right is a 27 year graph of crude oil prices. The mid point is around $80 a barrel. What is most remarkable is that after all the turmoil in the middle east and economic expansion that took place over the last quarter of a century, oil is still as cheap as it is. Governments should be thanking the oil industry for doing such a good job of finding new reserves and unlocking the full potential of existing basins. Crude Oil inventories in the U.S., aside from the Strategic Reserve, are around 4% below the five year average for this time of the year. Gasoline is about even with the five year and distillates are 7% below. Lately, I have been reading the work of self titled futurists who say that crude oil is about to make an historic price surge. They claim that buying things in the energy patch today is like buying gold at $500. They might be right. I also know that every dog has its day and that recommending out of favor things sometimes pays off. When it happens, those who told you to buy look smart when they were simply lucky.
To the left is a graph of XLE, the big energy ETF and crude oil. It looks like buyers of XLE think oil is going higher because they are putting money into oil company shares while the underlying commodity is selling off. Most commodity company profits tend to be some kind of percent of the price of the underlying item. If the price is falling, it is likely that profits for producers and refiners will follow.
On the left is the recent path of the U.S. Dollar Index. The series of a,b,c zig zags makes the formation look like a correction before another sell off. As a trader, I assumed that these types of patterns were setups for lower prices in other markets. When they broke to the upside instead, the rally was substantial. Trying to guess the outcome of a sideways pattern can be hazardous. Cyclesman.com, my favorite subscription service, says that the Dollar is due for a four year cycle low! On the right is a picture of the Dollar Index inverted. When the red line goes down, the Dollar is going up relative to other currencies. Usually, a stronger Dollar hurts gold. Another Dollar drop will fuel the "rejection of fiat currencies" narrative
DBC and GSG are both broad based commodity ETFs. DBC is tilted more toward grains and GSG toward energy. There are analysts saying we are in a commodities super-cycle and a 15 year period where commodities outperform stocks. Bulls see the long sideways trading as a base for a big upside move. If they break to the downside instead, the same analysts will modify their charts to say that the sideways move was a pause before a deflationary trend.
On the left is a "seasonality" graph for SPY, the S&P 500 ETF. This one is from Sentimentrader.com. This graph is everywhere with the assumption that starting this week, stocks have to rally into December because everyone knows that they do this every year. Back in September I heard many analysts say that seasonality called for a pull back into October and that everyone should buy the dip for a year end rally. If you knew something was going up in value starting the last week in October, wouldn't you buy ahead of time? Old timers often said that when a technical indicator becomes widely known, it loses its effectiveness. We will see if this is the case in 2025. On the right is a graph of the Dow Jones Industrials from 2007. During the summer of that year, there were reports from bond traders that there was a problem with the billions of Dollars worth of mortgage derivatives and markets were freezing up. That is what prompted the famous Jim Cramer "They Know Nothing" rant after the Fed said the problems were isolated. Recently we saw some big bankruptcies and loan write-offs with rumors of more to come. In 2007, the "seasonals" didn't work out that well. We are in a very different environment today. Computerization allows transaction free trading for a very small number of shares and the popularity of apps on phones creates an army of millions of inexperienced traders whose small orders are instantly pooled and executed. Added to this is the abundance of leveraged trading products referred to above. The normal band on market extremes has widened along with expectations of constantly making money. By the time I do my next update we will know if the "seasonals" kicked in as anticipated or if the positive seasonal window has become like the shares of a tech stock where traders buy in front of a good earnings announcement then sell on the news.
Here is something odd.
I subscribe (costs nothing) to Thoughtful Money which you can find on Youtube. Recently, the interviewee was Tom McClellan whose parents invented the famous McClellan Oscillator, available on all charting platforms. You can see the interview here - Market Now More 'Trigger-Happy' & Unpredictable Due To Uncertain Liquidity | Tom McClellan
Among his charts was one showing that long term interest rates tend to follow gold with a 20 and a half month lag and that based on this, he anticipated that long term rates were about to skyrocket! This goes against everything most analysts are predicting. I decided to build my own graph using end of week prices. The purple line is TYX which tracks the rate on a 30 Year Treasury Bond. The greenish line is the weekly closing price of spot gold in NY. I inserted the yellow bars at the recent little peaks in gold before it took off.
Despite being a big fan of Chart Mysticism and Technical Analysis hocus pocus, I am suspicious of graphs using big time gaps and historical data. I always say that when you decide to make the big bet on the thing that always worked in the past, it does the opposite and it turns out that you were not looking at anything that had predictive power, just a coincidence. Still, I am intrigued by this one because it is so far outside of the range of anything you hear from Wall St. analysts and economists.
Going into next week we should be on the cusp of when gold took off to the upside twenty and a half months ago! Let's see what happens.
Best Guesses -
Stocks - Seasonality says that stocks should rally into December. I am worried that investors already bought so that they can sit back for the next ten weeks and cash in. The AI universe is doing well but other sectors are lagging. If Tech insiders are selling, I don't want to be loading up. I would rather miss the year end rally than be caught at the top. During the first Trump administration, they always liked to come out with something late Sunday or early Monday to keep the rally going. Big negotiations are going on with China which could be this week's market pumping headline. Confidence in the positive narrative is the key. Everyone wants to keep the party going and delay the cleanup.
Bonds - Will McClellan be right? If so then it won't be good for any asset class. The Fed is expected to cut short term rates again. Not doing it or a hawkish news conference will shock the market. Even with rate cut expectations priced into the short end of the curve, the long end did not respond. Maybe he is right!
Dollar - The recent pattern still looks more corrective. We need a clear move above the recent range to change that.
Gold and Silver - Two weeks ago I was looking for a top and we got it. Even if it is only a correction, it is likely to last longer and go deeper. A simple correction would be a down, up then a second down that matches the first in length. We got the first down. Let's see what happens next.
Commodities - My wheat and natural gas ticked up a bit. If the gold and silver rallies were really about the "end of fiat," wouldn't most commodities also be doing something similar?
Oil - Did we get our seasonal low? Often, oil is weak into the end of the year and even the first week or two of January. Energy stocks are still optimistically priced relative to oil.
Best of luck,
DBE