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
July 18, 2026
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 Consumer Price Index (upper left) fell more than expected, dropping 0.4% last month and bringing down the annual rate to 3.5%. The upper right side graph shows the component details. Energy led the way lower. Both goods and services prices moderated (right). The CPI month over month drop was the most since April of 2020 in the middle of the COVID scare.
The Core reading (upper left) which excludes food and energy fell by 0.017% for the month which helped the year over year drop to 2.594. The index for homes rose 0.2% and rent was up 0.1% (upper left) I urge you to go to YouTube and watch some of the latest videos from Reventure Consulting, a firm that tracks home prices across the country, zip code by zip code. Prices are falling in many areas and this will show up in future reports. As usual, the government's big housing legislation became law after prices peaked and when they are already crashing in some zip codes. The reading for services only aside from shelter, known as the Supercore CPI (left) fell 0.2%, the most since COVID. Education, Communication and Transportation services were all down.
The odds of a rate hike plunged on the data and stocks initially rallied then pulled back. While the inflation news was positive, the price moderation could be signaling a slowdown in the economy. One thing to watch is population growth. Some demographers say that with the population of prime time consumers, age 18 to 60, flattening out or falling, there should be less demand for services and goods.
Producer Prices also saw a month over month decline, printing at 0.3% (left) and the annual rate fell to 5.5%. The biggest reason was the same as with the CPI; energy. Stripping out Food and Energy, the core number (right) was also lower than expected coming in at 0.2% with last months revised lower too. The year over year reading dropped to 4.7%. The services component rose slightly to 0.2% but goods demand fell 1.4% with gasoline to blame.
On July 8th, May's consumer credit report showed an outright drop of 5.3 billion dollars in credit card debt (left) after two months of hefty expansion. The right side graph shows the growth of non-revolving borrowing which is mostly student loans and car loans. It was up 5.1 billion Dollars in May. Car loans have come in at around the same levels for months. Student loans are driving the increase. The average rate on credit cards is around 22.15% so it is understandable that borrowers want to pay down loans, but the rate was high in March and April too. Economists will watch next month's data to see if consumers are finally cutting back on borrowing and spending.
Industrial Production (left) was up only 0.8% for the month. It is a volatile series as shown by the alternating green and red bars, however, if we get a third month of sub-par readings, analysts will begin to worry that it is in a downward trend. Capacity Utilization fell slightly to 76.10% (right). A one month drop is not a big deal, however, if you are worried about an economic slowdown, you can paint a picture from the statistics above. The core inflation numbers are tame, indicating a slowdown in demand for things in general. Consumers paid back debt two months ago as opposed to borrowing more and industrial production is down a bit. At times in the past, these things together were the first signs of a crack in the economy.
The weekly statistics on New Claims for Unemployment (left) and continuing claims (right, red line) show no signs of labor problems. Employment is a lagging indicator.
Last month, I presented a list of the things about which I was most concerned from an economic perspective. Number One was oil. It was down in price but unlikely to stay there. Suppose you owned a property that bordered a very popular hiking trail with a small creek running through it and there was a small, aging wooden bridge over the creek used by all walkers. You found out that you could fix up the bridge and put a box there for donations and every day, appreciative hikers were contributing. How likely would you be to discontinue asking for bridge money? Then, the town park service gets upset. They say that they will maintain the bridge and will put a scanner on it so that only people who pay for an app on their cell phone can use the bridge while saying that public bridges should be without restrictions. President Trump did something like that but once he realized that he was only giving Iran justification for their tolls, he withdrew the plan. The compromise that might end the war tomorrow would be Iran agreeing to inspections on its nuclear activities in return for a small toll, such as $0.50 per gallon on oil and a low amount relative to the value on refined products, chemicals, LNG and other freight. Again, for suppliers and consumers of goods, is there any economic difference between a small toll and tariffs on imported goods, levied by a government such as ours?
The left side grid shows the weekly inventory gains and losses for (from top to bottom) Crude Oil (not including the Strategic Reserve), Crude Oil stored at the giant Cushing, Oklahoma site, gasoline and distillates which includes diesel, heating oil and jet kerosene. The latest data is for the week ending July 10th. Crude Inventories fell 1.7 million barrels which is at the low end relative to most of the recent red bars. Inventories are roughly 6% below the five year average for this time of the year. Gasoline is 8% below and distillates are 11% below. Refineries are cranking out distillates so inventories improved over the last month. The blue part of the bars on the right side graph shows draw-downs (or additions) from the Strategic Reserve. At the height of the war, our government was exporting millions of gallons a week to relieve supply shortages in other countries. By the week of July 10th, before hostilities resumed, exports fell back to pre-war levels.
The upper left graph shows the flow of traffic through the Strait. Some ships are sneaking through with their transponders turned off so traffic is probably heavier than displayed on the graph. A lot of oil moved through the Strait during the lull in fighting so markets are not immediately reacting. The upper right side graph shows the storage levels at Cushing. This storage hub is a key player in the physical market for oil. When supplies are plentiful, the levels go up. The low levels indicate a tight market.
The crack spread is an indication of profitability for oil refining companies. It is the difference between the cost of crude oil and the revenues received from selling the refined gasoline and diesel. Pump prices rose a bit over the last week but it is not entirely due to the war with Iran. Ukraine is systematically bombing Russian oil facilities, especially refineries. Last week they hit a major refinery in Siberia. It was unprotected because no one thought Ukraine had a drone that could reach Siberia. Russia used to be a huge exporter of distillates accounting for 11% of the diesel outside of Russia. Before the Ukraine War, my heating oil (New England) was mostly from Russian refineries. Two weeks ago, they stopped exporting diesel because of domestic shortages and are importing gasoline from India! This is putting upward pressure on gasoline and diesel prices, world-wide. When the prices of refined products goes up relative to crude oil, the crack spread expands and oil refineries make more money. During the week of the 10th, they ran at 96.2% of capacity, a high number. You cannot build an oil refinery, turn it on and just let it run. They need constant maintenance costing tens of millions of Dollars per year. These upgrades and replacements are done in the spring and fall. If the markets are still tight at that time, the lower throughput from our refineries will make them even tighter.
The slug of oil that went through the Strait will put pressure on prices in the short term. Every day that goes by with the Strait running at a low capacity will push in the other direction with prices accelerating if it is not opened.
The upper left graph shows the trading pattern in August Crude Oil Futures last week. Chart wonks will say that the market traced out a contracting triangle (pennant) that will lead to a final spike higher then a reversal to the down side. It could be that Friday's peak was it. However, the multi month graph of gasoline on the upper right side hosts a similar pattern between the red dashed lines. The solid black line shows what could be the equivalent to Friday's high on Crude. Directly to the right is a chat of August Heating Oil futures and we are above the war time levels.
My second most important market to watch was AI and semiconductors because of the amount of the world's wealth invested in this area in both equity and debt. The upper left graph shows the path of SMH, the very popular semiconductor ETF. The top five companies in SMH are Nvidia (14.51%), Taiwan Semi (9.27%), Micron (7.84%), Intel (7.23%), and Advanced Micro (7.07%). These companies are currently making billions in profits but investors realize that at some point, there needs to be clear evidence that multi million Dollar data centers can repay their construction costs and current operational costs. It is still not certain that builders and users of data centers, the big AI companies and hyper scalers, can charge enough to make money. Last week, AI related investments sold off after a Chinese AI startup named Moonshot released their new Kimi K3 model which does coding as well or better than the latest from OpenAI and Antrhopic and costs a lot less. Other Chinese offerings are not as sophisticated as ours but they are good enough for 90% of the tasks demanded and cost a fraction of what OpenAI and Anthropic have to charge to justify their current valuations. On the upper right is a graph of the daily closing price of SMH and a simple RSI oscillator. The oscillator is down but not at the 0.20 level that signaled a washout in 2025. Last week I heard an analysts talking about the semiconductor stocks. He noted that after the dot.com bubble it took two and a half years before .com companies bottomed. Along the way there were some good rebounds when dip buyers stepped in but the stocks sold off again. The lower right side graph is AIQ, an ETF of Internet related companies. It has a similar list of heavyweights such as SK Hynix, Micron, AMD, Samsung, Intel, Cisco, Apple, Taiwan Semi, Broadcom and Nvidia. Nvidia perked up last week after a big Japanese Robotics company announced a major purchase of their chips as part of their production of humanoid robots. Because of the similar make up of it, AIQ will trend with SMH. On the lower right is a graph of the hourly rental price of Nvidia Blackwell chips. It peaked in early June and has been steady since then, trading between $8.41 to $8.43. Nvidia is rumored to be propping the price up by renting their own chips when demand falters. If the hourly fee starts to fall, you will see it reflected instantly in SMH and AIQ.
If AI is not making money, there will be pressure on hyper-scalers to cut back on CAPEX plans for next year. Earnings and future guidance on all of the companies are due in the next few weeks so investors will be watching for any indication that the CAPEX cycle is peaking. The assumed demand for all kinds of things, from steel and copper to fabricators of these metals and thousands of other companies whose products are used in data centers directly or indirectly is dependent on the current rate of spend lasting well into the future. Any sign of a pullback will have broad implications across market segments that most of us didn't even know were part of the AI story.
You can't watch TV for more than a few minutes without being told that your future depends on hoarding as much money as possible and that the sponsor of the advertisement is the best way to do so. That is usually followed by three more commercials urging you to part with your savings for a new truck, a trip to Turkey or six-pack of beer. The most popular method of hoarding is putting savings into an S&P 500 Index fund where your monthly deposit goes into the same group of companies without considering their merits or potential pitfalls. Above are two daily bar charts of the S&P 500. The low red colored "e" point on both marked what I believe was the end of an expanding consolidation that is usually followed by a final thrust and a reversal. The more optimistic left side graph interprets the sideways trading following the June 2nd peak as a consolidation for another move higher. It could be making a contracting triangle similar to the one feature in the Crude Oil graph shown earlier. The right side shows a more pessimistic view. Bears believe we finished the five wave advance, saw the initial sell off and are now poised for a strong down move that penetrates the lower dashed red line and accelerates lower.
Above are a daily bar chart (left) and a weekly graph of the closing price of the Dow Jones Industrials. The arrows point to 39 day trading cycle lows and candidates for 22 week trading cycle lows as put forth by Cyclesman.com, my favorite market subscription. We were due for a daily cycle low last week and might have hit it on Wednesday. If the Dow trades below that point, the cycle will be a failure and the odds will be for lower prices. The ideal low for the weekly cycle is a month away. When the market is lower into August, numerous articles surface warning investors that September is usually the weakest month of the year followed by crash-prone October. That can be a setup for a major low in August as traders try and front-run an anticipated crash by selling in August. The RSI momentum oscillator on the weekly graph is still near the high end of its range. This tells traders that there is a good chance that there will be a better buying point in the future.
On the upper left is the NASDAQ 100, heavily weighted with big Tech. The red dashed line was a shelf of support and it gave way late last week. The index nearly hit a previous low before bargain hunters jumped in to buy. A penetration of that low next week will put everyone who bought after May 5 in a losing position. On the right is the S&P 600, an index of small companies. Analysts say that the data center CAPEX spending will lift all boats because big companies getting paid for constructing and outfitting them buy parts and services from hundreds of smaller firms; the classic trickle down. If the crack in the AI story widens, it will quickly spread to small cap companies with analysts realizing that they are having their best payday now with demand for whatever they do falling in the future.
While Wall Street and retail traders continue to buy, corporate insiders unloaded shares of their companies. The red bar on the graph to the left is the latest.
Above are charts showing the current yield curve on U.S. Government Debt. The orange line is the latest. On the left side are shorter term rates. The yellow area is the current range for Fed Funds. Historically, when short term rates are above the Fed Funds rate, the Fed is more likely to raise rates than lower them. Some analysts use the 3 month rate as an indicator and others, the 2 year note. The shorter end of the curve is still below the levels from when President Trump took office (red line). The right side carries rates into the long end of the curve. They rose again to levels above the red line. The Pentagon claims that the war in Iran is costing 30 billion Dollars. Most economists' estimates are in the 80 to 100 billion Dollar range. Our government is also spending record amounts of money in an economy with full employment. AI is supposed to be the transitional technology that will grow the economy, increase tax revenues and stabilize our ratio of debt relative to the size of the economy. If the AI story falls apart, how will taxes ever catch up to spending?
On the left is a graph tracking the path of rates on a U.S. 10 Year Note, the most widely watched debt in the world. The a,b,c,d,e interprets the recent pattern as a contracting triangle that will have a final surge higher before reversing. The text book pattern calls for a brief pull back toward the lower red line. Rates could also consolidate around the upper line within the yellow box before moving higher. Patterns express probabilities. If the economy starts visibly slowing, rates could retreat and fall beneath the lower trend line. The right side chart shows the path of IEF with the daily percent gain or loss in the U.S. Dollar added. IEF is an ETF that tracks U.S. 7 to 10 year Notes. Debt securities (right) move opposite rates (left). I use the Dollar adjustment because billions are owned by non-Dollar investors. On July 10th our Treasury auctioned off 39 billion of 10 year paper. The bid to cover ratio was 2.565. The average for the last six auctions was 2.46 so there was excellent demand. Foreign buyers took down 81.5% of the available bonds, the 3rd highest on record. The huge demand from foreign investors goes against the doom and gloom narrative of budget hawks. Non-Dollar buyers are being paid 4.58% on these notes and benefit from an appreciating Dollar. It is worrisome because wealth from other parts of the world is seeking shelter in liquid U.S. debt. That means that they expect things to get worse in their own countries, economically and socially. Insiders usually move their money before they take action that makes headlines.
Above and to the left is a daily bar chart of the Dollar Index. My fantasy trade is that it completed an expanding triangle and will now sell off. There is nothing in the news that supports a weaker Dollar so my chart mysticism interpretation is weak for now. The two currencies most heavily weighted against the Dollar are the Euro followed by the Yen. The Euro has been remarkably stable against the Dollar for a year but is close to falling through support. The Yen's weakness is what helped the Dollar's rise.
Most of the betting money is for a further collapse in the Yen which will help the Dollar. If the Yen were a stock instead of a currency, it would look like a candidate for a reversal due to the loss of downside momentum over the last few months. If the Bank of Japan allows rates to rise, Yen shorts will rush to the exits. The other thing that could help the Yen would be a strong stock market sell off in the U.S. In the past, investors sought refuge in the Yen when equities in the U.S. hit the skids.
The left side graph shows gold and the value of the Dollar, upside down so that when the Dollar gets stronger, the red line goes down. Over time, a strong Dollar is bad for gold. The right side chart features gold and SCO, an inverse ETF for Oil. When oil goes up, SCO goes down. These correlations could be the same trade because often, when oil goes up (SCO down), the Dollar trades higher. If gold starts to rally even though the Dollar is getting stronger and oil is up, it will be a warning that a major geopolitical actor is planning some action and is moving their own money into gold ahead of time.
On the left is a weekly bar chart of spot gold prices in NY with arrows pointing to theoretical 18 week low timing bands as suggested by Cyclesman.com. Next week is a week 18. The right hand chart shows the weekly closing price of gold in NY with a simple RSI oscillator in red. It finished Friday at 0.22. I marked previous low oscillator reading with green dashed lines. All were relatively low risk times for buying gold. I am talking my book now because I bought some mining stocks on Friday in anticipation of the 18 week cycle and RSI number.
On a chart only basis, one could argue that silver is finishing a thrust down from a contracting triangle. Cyclesman has a 21 day low to low cycle for gold and the timing band for the next low starts next week. Silver tends to tag along. On the right is a graph of the weekly closing price of silver, it's one year moving average and the difference between the two in blue. Long time readers have seen this graph many times before with the warning that no one knows what silver is going to do. You give yourself the best chance of making money by buying when the blue line is in green dot territory and avoiding it when in red dot land. Well friends, it hit the green dot zone last week!
Over the last year, platinum and palladium followed gold. If gold rallies it should help these two metals but, it might be more complicated than that. They usually see their seasonal lows in the fall and if stocks tank, traders will not be in the mood to buy industrial metals that do well when the economy is strong. Last week, Ukraine hit an oil refinery in Siberia. What else is in that neck of the woods? The Nornickel mining complex that produces 40% of the world's palladium, 10% of the world's platinum and 10% of the world's copper. In an all out war, it would be a target. On the right is CPER, the copper tracking ETF and AIQ, the Artificial Intelligence ETF. For a while they were trading together. The justification for higher copper prices was the demand created by data center build-outs and upgrades to the grid. We are suppose to be in the part of the economic cycle when much of the money in the system flows into the real economy, building and making things. Usually, this favors industrial type commodities and particularly base metals. If the AI story falters and data centers are canceled it will not be good for the copper story. Also, newer chip designs that need less energy and memory are coming in the future. Over time, the estimates of new power plants that need to be built are likely to come down.
Above are two measurements of stocks in China. The CSI 300 is made up of the top 300 stocks on the Shanghai Stock Exchange. FXI is an ETF that tracks large cap Chinese stocks. Below both are simple RSI momentum oscillators. They have worked well signaling low and high risk periods for ownership. The large cap index has more hot tech names. It hit a low earlier this year and the current RSI reading does not indicate that it is a low risk buy. The Shanghai Composite includes smaller company names. Blue rectangles mark points when the oscillator hit over sold territory. It isn't low enough to signal a good entry point but with one more bad week at the track, it could be there. Most of our current industrial policy is designed to do what China has been doing for over a decade by investing in essential technology and resources. A few years ago, I was at an international pharma conference. The panel was discussing "re-shoring" to the United States. One of the participants from a large European pharmaceutical firm was asked about re-shoring to the United States. He said that one of the problems was that young people in the U.S. want to be TickTok influencers. Young people in China want to be chemists and engineers.
Last time, I wrote that wheat usually bottoms around the fist week of July. It conformed to its seasonal tendency and by week's end it was technically "over bought." I lightened up on my position for now. If it pulls back, I will load up again.
Russian and Ukraine are both big wheat growing areas. When you listen to the mainstream press you only hear about Russian attacks on Ukraine. Ukraine is hitting something inside, and often, deep inside Russia every night. Things don't seem to be getting better. They are getting worse and it is likely that Russia will stop fighting a limited war and will try and crush Ukraine. World War One started on July 28th, 1914. Wheat will be a beneficiary.
Best Guesses:
Stocks - Things don't look good. I am still sitting on the sidelines.
Bonds - I am staying away from bonds as long as the world is borrowing more and more money to fund war and technology that might not be able to repay the loans.
Dollar - The "e" point on my pattern is holding for now.
Gold and Silver - We are in the timing band for an 18 week cycle low on gold and the weekly RSI is at the bottom of its range. Silver is in green dot territory. I am buying!
Commodities - Commodities will be hurt if stocks sell off and the AI story falls apart, however, if Russia and Ukraine heat up, users will scramble to be well supplied, helping prices.
Oil - Physical supplies of oil are still low everywhere. We got the bounce. If the Strait does not reopen, there will be a slow march higher.
Quote of the week from page 603 of Global Crisis. War, Climate Change & Catastrophe in the Seventeenth Century by Geoffrey Parker -
"as the nobility of Russia reminded their tsar in 1653, when he invited their views on attacking the Polish-Lithuanian Commonwealth 'It is indeed easy to pull the sword from the scabbard, but not so easy to put it back when you want.' Their plea failed. A few moths later, the tsar began a war that would last for 13 years."
The lessons from history fill libraries.
Congratulations Spain for winning the World Cup!
Best of luck,
DBE