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. 12, 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.
Oil prices dominated trading over the past two weeks with investors interpreting economic statistics in the shadow of higher energy costs. Bulls looked at core measures that subtract food and energy, believing that at some point, the wars will end and oil prices will fall. Bears put more emphasis on headline numbers that include food and energy, believing that higher gasoline and diesel prices are not going away any time soon.
The Fed is meeting next week and was expected to raise overnight borrowing rates unless last week's CPI inflation data was lower than expected. It turned out to be a mixed picture. The headline number rose 0.4% for the month and 3.5% annually, in line with expectations (top left). Fuel prices were the culprit with gasoline prices accounting for a third of the gains. The Core reading hit 0.29% for last month, however the year over year fell to 2.4%. Interest rates fell on the news and on lower overnight oil prices. Traders reasoned that if oil falls, inflation will retreat. That is a big "if." Within the core statistics, costs for medical care in car insurance were down. Shelter inflation fell to 2.86% for the last year and rent was also lower at 2.04%. The SuperCore, services ex-shelter number was up 0.42% for the month and rose to 2.96% for the year (lower left) led by your kids' private schools costs and cell phone carriers raising rates last month despite all of them advertising on TV that they have the lowest costs (middle right).
Hourly Earnings were down again when adjusted for inflation (directly to the right).
The day before we got Producer Prices. The headline (upper left) came in at 0.4% monthly and 5.4% for last year, hotter than analyst estimated. Energy was the big factor with diesel prices alone accounting for a third of the increase. The Core number (upper right) rose only 0.2% in August and 4.6% for the last twelve months.
In some previous months, the cost of Goods was down. In August it jumped thanks to energy. The services component was up slightly.
Bond prices fell to their lows for the year (interest rates higher) after traders saw the blue lines on both PPI readings headed in the wrong direction. The probability of a rate hike next week rose to 75%.
On September 4th we got last month's jobs report (upper left). The wars are overshadowing economic data, but normally, in an election year this report would have been a big deal, covered heavily by conservative media and downplayed by the left. In August, the economy added 162,000 jobs and July's number was revised up by 44,000 and June's by 11,000. For most of this year, the number of people working dropped. In August it rose substantially (upper right) and so did full time jobs (lower left). Average hourly earnings came in at 3.1% for the last year as labor inflation pressures continue to subside. This was a great report, however, the bond market wanted indications of a looming recession and it got the opposite so rates rose across the curve following the release.
Existing Home Sales (left) fell 2% in August to an annual rate of 3.98 million homes (left). The median sales price is only up 1.6% from a year ago. Existing homes that are listed for sale continue to rise and now sit at a 4.9 month supply. According to Realtor.com, more home owners are willing to settle for a lower price than they were last year. In a past update I wrote about home owners delisting their properties when sellers refused to pay up. Now, they are more willing to compromise and putting their homes back on the market. When I drive around neighborhoods near where I live on Boston's North Shore, I see many more homes for sale than in the past half a decade.
On Monday the 7th China injected 56 billion Dollars into their largest banks and insurance companies to cover losses and enable them to increase loans to large customers. The upper left graph shows how bank lending is cratering in China despite low interest rates. One of Martin Armstrong's sayings is that when there is no confidence in the future, interest rates can be low, but there will be no takers. After China's big infrastructure build-out, the direction of credit creation in China, labeled the China Credit Impulse had a big following with some analyst saying that it was the most important statistic to monitor because it spread to the rest of the world and was a good future indicator for inflation and commodities prices. Lately, a number of pundits posted articles predicting a new wave of inflation driven by oil and physical demand for other commodities. This goes against the China Credit Impulse theory. In the U.S., we have many China Hawks who somehow think that weakening China is a goal. For the world as a whole to do well, we need all the major economies growing. The tech sector of China is doing very well and attracting huge amounts of capital, just as it is in the U.S. and other countries with the domestic know how to participate. Their consumer side is suffering with the largest asset class in the world: Chinese residential real estate, still not recovering. With domestic demand not carrying the economy, China is dumping manufactured goods around the world to keep its factories running. Any company in the U.S. that makes things that China exports is seeing their margins compressed and that is with tariffs added to the price. China's Shanghai Composite Index rallied off of the April 2025 low, just like all stock markets around the world. It is flat with year ago levels and trading near support. Will the massive money injection turn the tide or was it an act of desperation, similar to steps our Fed and Treasury took in 2008 when the Great Financial Crisis hit? No one knows yet but let's hope China recovers.
Summary Up Front - There are a lot of frightening things happening in the world, highlighted daily in the media. Oil is at the heart of it because there are two wars causing supply problems for oil and refined products. We are in a tariff dispute with our next door neighbor and most important trading partner. Elections are a couple of months away and we are reminded daily that September is the worst month for stocks, especially in a mid-term election year. How many times have you read about the super El Nino and its devastating consequences on crops? Wars are real events and no one can predict what will happen this weekend or next week. However, last weeks negative tone and constant warnings are similar to some previous negative inflection points for markets. Next week, we will be in one of Cyclesman.com's 39 trading day timing bands for a bottom. If we can't take out July's lows, we should have another rally phase.
Oil news dominated trading over the last two weeks. The diesel crack spread in particular (middle left) enticed Chinese refineries back into the market and they were willing to pay as much as $100 per barrel of crude, sourced from non-Persian Gulf locations. Super Tanker rates hit a million Dollars per day for Persian Gulf to China routes. That works out to around $18 per day per barrel of Crude Oil. The non-war, war resumed between Iran and the U.S. The pumping stations on the Saudi oil pipeline that skirts the Persian Gulf were hit by drones launched from Iraq. The Houthis took over more coastal towns on the Red Sea and some islands which allow them to disrupt flows of oil out of the Red Sea. They also attacked Saudi Refineries, crippling the production of gasoline and diesel. Ukraine continues to take out Russian oil refineries and now they are not exporting gasoline and distillates. The top right graph shows how often crude oil closed in certain $5 price ranges recently. We added two days above $100 last week. Diesel and other distillate prices climbed to record levels. Products that move by truck, rail and ship, which is everything, just got more expensive. My heating bills and those of my neighbors will result in us reducing expenditures on other things.
The graph to the left shows the path of October Crude Oil futures overnight on Thursday and into Friday's close. Yes, I know that the world could blow up this weekend. However, the graph has the appearance of a market that is going to sell off next week! Two reports were referenced by analysts. The International Energy Agency said that higher prices were causing demand destruction. Also, Iran and delegates from other Middle East countries are meeting on Monday to discuss an ending to the war. Will we wake up Monday morning with more bad news or a path forward that spells relief for the oil crisis?
Three other markets that are part of the "shortage and crisis" trade also fell by week's end. The top left chart shows a weekly copper graph with prices taken from the most active trading contract. The upper right picture is from last week. Prices hit the skids on Friday and closed near where they were in May. How many analysts have you listened to who predicted much higher copper prices?
Soybeans rallied strongly over the last month then traced out a contracting triangle and final burst before a reversal at week's end. This is usually a topping pattern that leads to more than a one day sell off.
Wheat, the commodity linked to the war between Russia and Ukraine hit its high early in September. The pattern looks like it could have more down side. The bottom of the vertical red line to the right is my target.
On only a chart basis, something happened late last week that suggests a peak in anxiety for now.
Two weeks ago I mentioned that one of Cyclesman.com's 39 day trading cycles would enter its timing band for a low in mid-September. These sometimes bottom early or late with 70% falling within plus or minus 5 days of the ideal 39. Above are charts of the S&P 500 and NYSE Composite. Unless we hit the skids early next week, we will come into the cycle low above the previous one in July. This is usually a good omen for another attempt at higher prices.
The Dow Jones Industrials were weaker due to some drug company stocks that had a bad week at the track, however, unless they can drag it lower into next week, it will go into the timing band above its July bottom. The NASDAQ 100 hit its July low a week later than other market sectors so I will give it an additional week to test July. Last week was Goldman Sachs' big technology conference which helped tech stocks. There could be some indigestion going into next week. Last time, I covered the trillions of Dollars in off-balance sheet commitments that hyper-scalers are locked into. One number cruncher says that revenue from AI adoption will have to grow 50% per year to break even. China's Deep Seek came out with a new AI that uses much less memory and costs a fraction of what Open AI and Anthropic charge. Most of us do not need a Corvette to go to the grocery store and will not need the most advanced U.S. frontier AIs to do common tasks.
As skeptical as I am on stocks, I cannot ignore these graphs. The upper left shows analysts estimates of profit margins on the S&P 500. The upper right tracks forward P.E. ratios based on those earnings. The graph to the left shows the P.E. ratio divided by margin estimates. Previous low points marked the bottom of major selloffs.
The counter argument is that those profit margin assumptions are based on a handful of AI related companies with circular financing. Nvidia is promising investments and using its balance sheet to back its customers. Micron and other memory companies will have blowout earnings this year and into next, but what happens after the CapEx boom peaks or if AI doesn't have enough paying customers to cover its sunk and current costs? What if AI figures out a way to train itself and operate agents with a fraction of the computing power in place? The credit default swaps on the bonds of all of these companies are getting more expensive. People on the debt side are growing more cautious and that warns those on the equity side too. Every market sector except for Health Care and Consumer Staples has a high correlation with the AI trade. Everything is leveraged to an amazing technology that might not generate enough cash flow to pay for itself.
The orange lines show where interest rates on U.S. Government debt obligations finished the week. Savers can get a decent return on shorter term Treasury Notes. Everything on that end of the curve is trading above the current Fed Funds range (left side in yellow) so it is assumed that the Fed will increase overnight borrowing rates by at least a quarter of a percent next week.
Analysts are giving multiple reasons for high interest rates. The list includes competition for borrowing among sovereigns and AI, economic strength and war time risks. The most obvious is oil. On the right is a graph of rates on a ten year T Note in red and oil prices in green. The chart is saying that if we can catch a break with oil, interest rates on longer dated debt will follow. Those who say that rates are rising on the long end because of worries over government spending will be surprised by the graph on the left. The green line is the difference between the rate on a ten year and a thirty year. It came in over the last couple of weeks. If the world was truly worried about the future ability of the United States to pay, the spread would be getting wider. Last week, the Treasury auctioned off billions in notes and bonds. On Thursday, they sold 22 billion Dollars of 30 year bonds. The demand was huge. Before the auction, the "when issued" was trading at 5.335%. The auction priced below that at 5.308%, stopping through by 2.7 basis points. The bid to cover ratio was 2.612, the highest since February. Foreign buyers took down 79.5% of the paper, the second highest on record for a 30 year bond auction. Domestic money managers bought 18.3%, leaving dealers with a record low 2.21% of the auction. If you are reading or listening to people who tell you there is no demand for U.S. Government debt, how do they explain this?
I will defer to Cyclesman.com's timing bands on the U.S. Dollar. We are due for a daily cycle low in a couple of weeks and the 19 week cycle low timing band is right now. Last week, both the Bank of Japan and our Treasury sold Dollars and bought Yen, weakening the Dollar. Our Treasury Secretary dared speculators to trade against his Yen buy. He should know better because he worked for George Soros, who made his fortune betting against currency pegs. Traders are also worried that the Bank of Japan will raise rates, making the Yen more attractive. By this weekend, some analysts were saying that the Yen turned a corner and will strengthen from here.
I am worried that it might be tracing out an expanding triangle, a,b,c,d,e. For the art to look perfect, it should fall to around 150 Yen to the Dollar then run to new highs (weaker) against the Dollar, setting off a major crisis for Japan.
Ursula von der Leyen, the President of the European Commission gave a speech in which she talked about the E U seizing bank deposits in Europe to pay down deficits and fund military spending. Is it just a coincidence that we saw record foreign money flowing into our Treasury bonds and notes? Ursula is saying out loud, what most politicians believe which is that all wealth belongs to the state with politicians deciding how much you get to keep for yourself and your family.
Most assets are trading counter to oil and that includes gold. Above are weekly and daily graphs of the metal with Cyclesman.com's theoretical timing bands for a low. Next week is the target for the dailies and it implies that oil prices will pull back a bit. My theory is that gold will take its time correcting the big up move from the last couple of years, making multiple changes of direction and losing money for bulls and bears alike. If gold rallies next week it could be a false start with another sour patch ahead into the weekly cycle lows due in the middle of November.
I expect silver to do the same but on a weaker basis. On the right is a chart of the daily spot closing price of platinum and palladium in NY. Both metals were dragged higher by gold. Lately, they get a small bump up when gold does well then a larger sell off when gold slides. The yellow shaded area marks the period between October and December when both metals tend to make lows. Lease costs are back down to reasonable levels. Many users were faced with extremely high lease rates earlier this year and told themselves that they would buy rather than be at the mercy of leases if the prices came back down. My guess is that they will hold off until the next crisis then look back at this fall as the time they should have done something.
Best Guesses:
Stocks - The level of negativity in the financial press reminds me of previous lows. That, and the cycle low timing bands have me looking for a buying opportunity next week. If we get a couple of days of good markets and then stall, graphs of 1987 will become more popular. A repeat is highly unlikely but the memory is burned into all of us who were active at that time. In 1987, the beginning of the big sell off was 31 days after the peak. Thursday is the 31st day from this year's high.
Bonds - It is all about oil. If oil backs off, bonds will rally. Europe is headed toward capital controls per Ursula von der Leyen. Did she just set off a rush into U S Treasuries?
Gold and Silver - We should get a bounce with the daily cycle lows next week. I expect any rally to be part of an on-going correction that runs into next year.
Oil - The news is terrible but Friday's chart along with media panic hints at a short-term peak. Let's hope diplomats meeting on Monday can hammer something out that allows oil to flow again. My guess is that any accommodation will be temporary.
Other Commodities - We got end of the week sell offs. If oil pulls back a bit, I expect other commodities to do the same.
Best of luck,
DBE