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
April 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.
Economists are telling us that tariffs will cause inflation. Above and to the left is the latest on import prices. Last month they fell. On the upper right is a picture of import prices from China alone and they have been falling as Chinese companies lowered prices to try and move more product during a time of lower domestic demand. Will this trend stay intact? To the left is a picture of import volumes from ships unloading at the Port of Los Angeles. The tonnage is dropping quickly. This has ramifications for trucking companies that service the port and rail loadings. Most of all, it will mean that some of the things you planned to buy will not be there. I stocked up on Tylenol last week. I don't know where it is made but I started hoarding just in case. If I am doing it then other people are too. As soon as stories start appearing on TV about empty shelves, it will be like COVID and toilet paper again.
In times of war, markets disappear. Russia was the biggest trading partner for some European products. The only way to increase demand when there is no foreign outlet is to lower prices at home. For U.S. companies blocked from selling things in China and possibly elsewhere, this will be the only choice. Products that are in short supply or no longer available will be more expensive. We will see how this shakes out over the next month. All of us have looked at the fine print on things we purchased and said to ourselves, "Everything in that store comes from China." Even if the trade dispute is settled in the next two weeks, there will be a significant lag until the store shelves are replenished.
Seventy percent of our economy is based on consumer spending. Economists and lay people like me have been wondering when the overly indebted consumer will stop spending. It certainly wasn't last month. Retail sales rose 1.4% (left). Even on a non-seasonally adjusted but corrected for inflation basis, retail sales rose 2.2% (right).
Cars (left, blue line) and stuff you buy at Lowes and Home Depot (green line) were also up. Gasoline sales in dollar terms were down (yellow). The restaurant business was up too! (right side). So, where is the recession?
Industrial Production (left) was off slightly from high levels. Manufacturing output rose (upper right). Capacity utilization (lower right) fell slightly after rising for the last few months. None of these graphs suggests that we are in a recession. One could argue that with tariffs coming, producers ordered and manufactured as much as possible knowing that parts and ingredients from China and other places will be more expensive or unavailable in the future. With the full impact yet to hit, as shown by the slowdown at the Port of Los Angeles above, what happened last month is nice but today's trading is all about what might happen next month and the month after that.
Every month, a few respected firms question purchasing managers about current conditions and future orders. The left side chart shows the latest results from one of these surveys. The blue line is for manufacturing and the green is for services. The red line shows the trend in hard data like the manufacturing and industrial production numbers in the previous set of graphs. Survey data on the future has been pessimistic for months but when the hard data comes in it tends to be OK - - so far. On the right is another survey of purchasing managers asking about future output. It is also pessimistic.
New and existing home sales are up one month and crashing the next. What is interesting is that the inventory of unsold homes in both categories is rising. In the case of new homes the level is back to where it was in 2007. Existing homes are also slowly creeping higher. Last week I read a report on the sudden increase in unsold inventory in the Miami area. I get monthly reports for my area on the number of homes sold and currently for sale and the days on the market before being sold . So far, things are still tight.
Back to the hard data. Durable goods orders jumped last month! (upper left). But it was all due to Boeing getting a lot of orders for new aircraft. When those orders are subtracted from the total it turns out that everything else was barely positive for the month (right).
Non Defense Capital Goods Shipments (left) fell 1.9%, one of their larger declines. The series is erratic as can be seen by the clusters of red then green but over the last year the red bars are slightly more frequent than the green.
So, what do the markets make of this data? When the numbers are up the tendency is to say that these are pre-tariff announcement statistics or they were good because companies bought in anticipation of tariffs and produced things to get them out there before they are hit with higher prices. When the numbers are down, analyst say that it confirms their fears that we are headed into a recession. Everything is seen in the light of a coming recession.
In the mean time, traders are more afraid or encouraged by the latest social media post from the President or some comment from someone in his inner circle. On one day there is panic buying following positive news. The next day the opposite takes place.
The only things people really care about are the stock market, gold and silver. Their worry over the stock market is more than in the past because after a couple of excellent years, everyone loaded up on stocks with the most common investment strategy being index funds benchmarked to the S&P 500. Think if it this way - Multiply the usual worry over ones retirement fund by the percent allocated to stocks. As the allocation increased, so did the anxiety. Many retirement plans allow you to switch in and out of funds so that you can exit the market and get the safety of a money market fund but you can only change your allocation once per 30 days. After a big decline and substantial Dollar loss, you worry that if you switch into cash you will miss a potential rebound. When we get a 400 point up day it makes you think that all will be well so you stay with the plan. You call the guy who told you to go all-in and he can't really change his position because he is on the hook for you buying at the top. Regular readers know that I have not been a fan of stocks for a while now. Developing a strategy for the next 10 days of trading is worthless when a few words from the administration can run prices up or down but it is what I do. This week I will talk a bit about how I evaluate things. Keep in mind that I am not an investment advisor and I do not "invest." I see the stock market measurements as numbers. My hobby is to look at my charts at the end of the day and try and guess if those numbers are going to go up or down over the next week. I don't care about the direction. Here is what I am watching going into this week.
On the left is a graph of the S&P 500, its 40 week moving average and the difference between the two in purple. Red arrows point to low points in the difference. Stars are near high points. My thesis has always been that if you are a long term investor you wait for an arrow to buy. It does not guarantee a profit but it means you are buying after others dumped in a panic type move so you have a better chance of making money. Notice the cluster of stars on the way up. My guess is that we will see a cluster of arrows on the way down. I am in no hurry to buy. The right side graph shows four hour bars of price action in the S&P 500 since it topped in mid-February. Below it is a slow stochastic oscillator. I use four hour bars for a reason. My experience in markets is that when the slow stochastic oscillator on four hour bars hits the top of its range, your odds of making money by buying are very limited. Once in a while a superman type of market comes along and it keeps going higher but most of the time you are better off sitting and waiting. It is a similar story on the down side. Most brokerage accounts offer their clients graphics packages that include the ability to choose four hour bars and overlay a slow stochastic oscillator and you can use barchart.com for free so check it out. Does it work 100% of the time? No. But it is much better than hearing some analyst say something positive or negative about the market then placing an order based on their comments. The red marker highlights March 13th. My favorite market subscription, Cyclesman.com has a 39 day, low to low, cycle for stocks. The last one was at the red mark. The next one is in a couple of weeks. Sometimes, when a market gets crushed these cycles can bottom early so you can never bet the farm on them. With the slow stochastic oscillator on a 4 hour bar chart at its highs and a potential cycle low in front of us, I am cautious going into the weekend.
On the left is a weekly bar chart of the Dow Jones Industrials with red arrows marking the ideal points of Cyclesman.com's 22 week cycle lows. The next one is due in mid June but some run short or long so I use these as a guideline, not an axiom. On the right is another four hour bar chart of the Dow with a slow stochastic oscillator below and the red thick line marking the last 39 day cycle low. By week's end, analysts were much more bullish on stocks and giving reasons why this is a great buying opportunity. We had an initial sell off that ended at the red marker. After a brief consolidation we had a second sell off then a sideways move that so far, failed to better the rebound high following the red mark. Maybe next week we will get lucky and take out the high. Going into the weekend I am skeptical because I have seen these kinds of sideways moves lead to waterfall declines. Even if I am wrong, with the slow stochastic oscillator near the top of its range, the market should not run away to the upside without me. Back to the weekly graph on the left. Cyclesman.com and many other cycle analysts say that there is a four year cycle in stocks. The last four year cycle low was in the fall of 2022 at the point of the left most red arrow. One sign that the four year cycle peaked is when the market makes a monthly swing high. This happens when it trades below the previous month's lowest price. We did that recently. If cycle theory holds then the next four year cycle low is ideally due in 2026. Like the other cycles, it can run long or short by months so it is something to keep in the back of your mind and add to your mixture of things when evaluating your exposure to stocks.
Google and Texas Instruments reported good quarters and by Friday it looked like Happy Days are Here Again for tech. The oscillator on the NASDAQ 100 four hour bar chart is hitting the top of its range so a disciplined trader has to sit and watch for now. Computer chip companies hit their peak last summer. With every larger country pushing for their own domestic production there will be a surplus of them in a few years. In past updates I wrote that time is not a friend to technology. NVIDIA was thought to be a one of a kind winner but since then competitors gained and questions arose about how many data centers and state of the art chips are needed.
On the left is a chart of the weekly closing price of gold in NY and a simple RSI momentum oscillator. Highs in the oscillator frequently coincide with the same in gold even if, after a correction, gold continues its advance. During the last week of the gold surge most of the action happened overnight in China. On the right is a chart of gold, priced in Yuan in Shanghai. You can find it on the KITCO website or check the website for the Shanghai Gold Exchange. There was panic buying for a few days in China. Even though the government reported that things would be OK without the U.S. consumer, millions of people in the country thought otherwise and bought gold. With President Trump striking a more conciliatory tone on tariffs, the panic subsided. Price moves are never a one way street. At some price point there are enough owners that have significant gains who realize that they can cash in and pay off their debt or buy nice things. This could include some central banks that could use the Dollars to pay down Dollar denominated debt.
On the left is a long term chart of the weekly closing price of gold and the Dow Jones Industrial Average. The right side chart shows gold and the performance of the NASDAQ Composite relative to the Dow Jones Industrial Average. Gold fans think there will be a time when gold stands alone as an asset and the "paper world" which includes Dollars, Euros and other currencies and the stock market, all crash. They might be right but, the history of these graphs suggest that speculation in stocks and gold are fellow travelers with some measure of over performance by stocks or gold at times.
With the weekly RSI reading above .80 and the timing band for one of Cyclesman.com's 21 day trading cycles ahead, I am not interested in loading up on gold. To the right is a graph of June gold futures using hourly bars. The sell off took $239 per ounce away from gold very quickly. The rebound is shallow so far.
I keep thinking that gold and silver mining company shares will catch fire but it didn't happen. The blue line on the left side graph shows the daily closing price of XAU, an index of these companies. It was much higher 15 years ago when gold was at half the price it hit a week ago. There are lots of rational explanations for this. The cost of getting an ounce of gold out of the ground is more than it was a decade ago and that doesn't include the exploration and permitting expenditures. There are more thrilling alternatives such as leveraged ETFs that give traders a big bang for their buck and immediate reward or pain versus waiting for quarterly reports on earnings and production and hoping that a primary crusher is not shut down or some other mishap that slows production. On the right is a totally subjective and fanciful positive interpretation of the the price pattern of XAU. It sees the two year consolidation between 2020 and 2022 as an expanding triangle form that usually leads to a manic surge to new highs before a reversal. We got a surge but not enough mania, so it is possible that we have a wave four and final enthusiastic wave five ahead. Hope springs eternal and I still buy lottery tickets when the jackpot gets big enough.
One of my rules in life is that people should not encourage friends and family members to invest in silver. However - - analysts who follow long term cycles claim that silver has an 8 year trading cycle with the first four years favoring higher prices. They say that we recently entered the positive four years of the cycle. One of the services to which I subscribe, Sentimentrader.com, follows seasonal tendencies. May and June are traditionally sideways to down months for gold and silver. During the positive years in a silver cycle, pullbacks are shallow and July is often a very good month for the metal. Everyone follows these cycles and patterns these days so it is likely that traders will try and front run what they see as a guaranteed profit in July. Another thing that has my attention is that the most recent advance traced out a clear five waves up. For chart wonks this implies a three wave pull back and if that sell off does not take out the low, another move up. Note how silver did well recently when gold got crushed. Martin Armstrong, one of my favorite commentators on the markets, says that there was a huge, buy gold, sell silver trade that got unwound last week. Let's see how silver looks when the oscillator gets oversold.
China is considered to be the biggest user of industrial commodities so an agreement between the U.S. and China would help metals like platinum and palladium. Both have been in the doldrums for a while and few traders are going to be big buyers while there is recession talk and the stock market is not doing well. Metals have a a long term cycle related to mining. When prices go up, mines expand and companies explore for more deposits. This is a prolonged process so there is a considerable lag between prices and output. Once the mines are up and going, supply increases and the price rolls over. Mining companies take advantage of high prices to sell futures and forward contracts so that even after prices decline they can deliver metal against the higher prices locked in by futures and forwards and keep producing. Over time, they use up these hedges and begin to curtail production, close high cost properties, merge with other companies then questioning if they even want to be in the business. That is where we are now in the platinum group metals cycle. When this happens, the supply of newly mined metal starts to go down setting up the next cycle. As someone who writes about these metals I like to find the potential for action and something interesting to say about them even in a dull market even if I have to get exotic. The platinum graph on the right takes the weekly closing price of platinum and adds the percent gain or loss in the Dollar Index to the price. Following a low and the initial rally in 2020 prices chopped around in a relatively narrow range. If this were a stock I would watch for something to happen after we get close to the "e" point and given the pattern, my guess is that the event will be higher prices.
Last time I thought we were close to a low in the Dollar. Too many people were blogging about a "Dollar Collapse" and we were due for a short term cycle low. Around the world there was a move to repatriate wealth from the U.S. in response to tariffs and more importantly, fears of an economic slowdown. In times of uncertainty you bring your money home. The Euro had a great run despite statistics from Germany showing their economy continues to struggle and the UK, Denmark and France anxious to fight with Russia. Given the rapidity of the Dollar sell off we should get a bounce followed by another attempt to go lower this summer.
The orange line shows the current yield curve. Over the last two weeks, rates on longer dated loans were fairly stable. Shorter maturities dipped amid hopes that the Fed might cut and fears of a slowdown coming into the summer. On the right is a graph of rates on 10 year Notes and 30 year Bonds. Since August of 2023 interest rates and longer dated government bonds have been fairly stable. The spread between interest paid on a 10 and 30 rose slightly. By the end of last week it stood at 0.472 of one percent which is not a lot when you realize that there is a 20 year difference between maturities. One thing that keeps the spread muted is the liquidity in the U.S. Bond market. Traders can buy and sell billions of Dollars worth of bonds without moving the market much. Because of this they believe that they will be smart enough to sniff out trouble and dump their bonds before suffering too much damage. The problem with this theory is that in true moments of panic, liquidity dries up and you end up with all sellers and no buyers. If Martians land and say they want to expand their galaxy wide investment portfolios into U.S. Bonds then you will get all buyers and no sellers.
On the left is DBC, an ETF that tracks a basket of commodities. The red line is its 200 day moving average. Last summer, cycle analysts said that we were starting a timing band when commodities should out perform stocks. So far it has not happened despite copper doing its best to rally. When international trade shuts down due to higher tariffs, it is difficult to predict how it will impact different commodities. Prices can rise in a country that tariffs things that are needed but not produced domestically and fall for things produced where tariffs in consuming countries curtail demand.
Crude Oil fell below its long standing support level at the beginning of April. The textbook bear market pattern is for it to make an "N" around the breakdown point before going lower. The right side shorter term chart shows a rally back to the breakdown level that could be the first upward leg of the "N." Last week there were reports that some OPEC + members want their quotas increased so that they can sell more oil and bring in more money. Crude inventory levels in the U.S. are around 5% below the five year average for this time of the year. Gasoline is 3% below and distillates are 13% below. Energy markets are anticipating lower demand and with imports from China grinding down quickly, there will be fewer trucks at the Port of Los Angeles and other west coast ports which is why the 13% number is not a big deal right now.
Best Guesses -
Stock Market - I am using momentum oscillators like those shown above to initiate trades. I don't want to be long when the oscillator is high nor short when it is low. I will also watch Cyclesman.com's cycle low timing bands. We have one of the lows hitting in a couple of weeks. Going into this coming week I am out of the market. Down trending markets are like playing the slots in a casino. You get a roll of tokens and win enough to keep you at the machine. Sometimes you nearly recoup your losses and you think you are on a winning streak but over time the draw-downs are more than the up ticks. It is especially difficult if your money is tied up in funds that can only switch investment vehicles once a month. Remember, there is no one putting a gun to your head saying you have to own stocks. You don't have to quit entirely. You can just reduce your allocation and sleep a bit better. Missing out on a gain is less stressful than losing.
Bonds - We can get some ups and downs but the world is in debt to such a degree that over time, rates are likely to rise as trust in repayment erodes.
Gold and Silver - My weekly RSI is still too high and we are coming into months when the metals are usually weak. I will hold off for now. Will gold and silver diverge from stocks? In a world where all other kinds of collateral look shaky, yes. But I am not going to bet the farm on it. I said some positive things about silver. In the past I always regretted it a few months later. Let's hope it works out differently this time around.
Oil - Above I highlight the textbook "N." A bomb here or an attack there and it could be $20 higher overnight.
Other Commodities - What is going to get a tariff and what is not? Which of our markets for grains and meats will no longer be open? President Trump says we are close to a cease fire in Ukraine. Will this open our markets to products from Russia including grains and energy and will we now be able to sell them things too? Will it end the liquid natural gas trade to Europe because they can buy cheap Russian gas through pipelines? That would make recent multi billion Dollar investments in liquefied natural gas plants a bust. Will a deal with China include purchases of liquefied natural gas and grains? I cannot predict all these variables. No one else can either.
Remember, what is good for the future of the country is not necessarily good for corporate profits or the demand for goods and services.
Unneeded commentary - Some Trump theory and more book talk -
In a previous update I wrote that President Trump is doing with the country what any CEO would do when taking over a large money losing company. He wants to cut costs and raise revenues. According to the latest statistics, the top 10% of income earners pay 72% of all federal income taxes and this is with President Trump's tax cuts from his first term in tact so the idea that you can "tax the rich" even more is unrealistic. The top 1% alone pay 40% and those people can move to any tax jurisdiction in the world so the Bernie, AOC, Elisabeth Warren crowd are lying to the American public when they claim the rich are not paying their "fair share." Corporate taxes only get passed along to consumers. Most economists blame high taxes and increased regulation for why companies want to leave the country. So, where do you go for some broad based tax to increase the take of the federal government? Trump's answer is tariffs. Many politicians are ideologues or like Elizabeth Warren and Bernie they establish a political persona that they cannot back away from. Think of it as like the hair styles of Bruce Jenner or Dorothy Hamil, the ice skater. Decades after they won their medals they had to keep their trademark hair cuts. Trump is not like that. He is a trial and error kind of guy who will put something out there and walk it back to the point where it works. After facing draconian tariffs, a compromise at 5% or 10% seems like "Trump blinked" or Trump "caved" which is what his critics will say but they live in a political world where these things matter. Trump will be 79 in a couple of months and doesn't care what politicians who want to stay in Washington another 20 years or their friends in the media have to say. He knows the country is in financial trouble and its social safety net is in danger unless costs are cut and money coming in is increased. So what happens if we reach compromises with many of our largest trading partners? My guess is that they open their markets a bit and some baseline tariffs on goods coming into the U.S. become permanent, adding to the Dollars coming out of our pockets and going into the Federal piggy bank. Democrats will scream about the increased costs of tariffs on American consumers but when in power they always want to raise taxes so why are they complaining?. Tariffs will be like a national sales tax which many of them have wanted. As payees, we need to keep in mind that when President Trump boasts that "the government took in trillions in tariffs since liberation day," much of that is coming out of our pockets. If we don't like it when a Democrat wants to raise our taxes, why should we cheer when a Republican does the same thing?
Given that we had a 160 billion Dollar deficit in March alone even after DOGE cuts and borrowing costs are going up, what does the future hold for other government largess? During past recessions, companies at first offered "buyouts" to older employees, giving them some kind of extended payout and benefits if they left, just like the Trump administration is doing now. History shows that you are always better off taking the first round of buyouts. The second round offers employees less and after that, you are sitting at your cubicle and uniformed security guys come to you with a box and tell you that you have 15 minutes to gather your personal belongings and leave. This is the most likely path for our Federal Government and everyone knows it. So why are Democrats and some Republicans so upset by DOGE cuts which are a tiny fraction of expenditures? I just finished The Great Leveler by Walter Scheidel. He documents that wealth inequality is and has been a fact of life under every kind of government throughout history. This includes socialists, commies, kingdoms, dictatorships and free market economies. The longer the period of relative stability, the more wealth accumulates in the hands of fewer families. He cites 4 events that cause the leveling of incomes. 1. Mass mobilization wars of which there have only been two major ones along with some regional examples that hit some countries more than others. 2. Violent Revolutions that kill the rich and take their stuff. Russia and China, just two. 3. Plagues that wipe out people. COVID did not qualify but it destroyed the wealth of a lot of small business people. 4. Government collapse. When illustrating this last event he refers to autocratic governments where well connected families and individuals are given status and privilege by the ruling group that allows them to harvest wealth from those that they regulate, control and tax. In a way, what we are seeing with DOGE cuts is a miniature instance of this fourth income leveling phenomenon. You might remember that during the worst of the financial crisis under Obama and the Democrats, the counties around Washington DC became the richest in the country. The Clintons and second Bush pushed "globalization" that allowed corporations to lower their costs by moving plants to China and other places for cheap labor and lower regulation and in some cases big export subsidies. The top management of these firms grew exceedingly wealthy and shareholders made out well. The top 10% of wealthy people in the U.S. own around 89% of publicly traded stocks. In Trump's first acceptance speech he mentioned people in Washington who teamed up with corporate forces to enrich themselves at the expense of the general population. The people in those wealthy suburbs around Washington D C knew exactly what he was saying and did their best to derail his presidency to protect their stream of income. During the Biden administration, thousands of NGOs came into being or expanded and used their connections in the administration to harvest billions of Dollars and line their pockets. All these things added to income inequality. The Trump version II is wiser and using DOGE to cut the money flow to these individuals. His trade policies undermine the source of wealth for many companies and CEOs along with their top management. It also limits the cash from lobbyists and NGOs going back to politicians. The number of homes for sale in the Washington D C area is steadily rising. An entire layer of the well connected top 10% of income earners is being cut off.
Living in Massachusetts, I have many liberal friends who, like Bernie and Elizabeth Warren, our Senator, complain constantly about wealth inequality. But when a real life wealth leveling event happens like a pull back in the stock market or a halt to government money flowing to the well connected and rich, they are up in arms and holding signs downtown on Saturday morning. It goes to show that they don't really care about income inequality. They just want to be in charge.
Best of luck,
DBE