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. 12, 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.
Due to travel I didn't get a chance to work on my update until Sunday, so it will be short.
The government is shut down so we did not get the usual monthly updates. There was some talk of "Wall St. flying blind" but lately, investors wanted to buy no matter what the data said. No one really seemed to care about the lack of official statistics and it turns out that most big Wall St. firms have proxies for the government data as part of their research which is why they feel confident criticizing many of the government's official numbers. Here are some graphs from private sources.
ADP, the huge payrolls processor said we lost 32,000 jobs in September (upper left). There were losses in both goods producing companies and services (upper right). After the report, the odds of a rate cut shot higher (left).
There are different firms taking surveys of purchasing managers in manufacturing and services companies. Readings below 50 indicate a shrinking environment. Above 50 implies growth. On the left are two surveys showing slightly different results. On the right is a global purchasing managers survey from S&P showing a slight downturn. The shaded area shows GDP numbers that followed.
Indeed, the big jobs website, publishes employment trends based on what they see among companies that use their services. According to their records, layoffs are still historically low while hiring is slowing down. This gives credence to the theme that companies are not laying off lots of workers while at the same time, they are not hiring. There are reports that well educated college graduates are having a hard time finding entry level positions.
A Market Watch article showed the graph to the right. Based on a basket of metrics, 22 states are not doing well.
Within the last few weeks, the small number of companies who make up the U.S. AI oligarchy announced financing and cross-purchase deals. Some of them sounded like this: "I will give you ten billion Dollars over the next few years and you will buy ten billion Dollars of my stuff." Investors loved the announcements and drove the price of Oracle, Intel, AMD, IBM and Nvidia higher as if the deals were already paid for, with money delivered and the profits to pay for all of rolling in. On the upper right is a Morgan Stanley graph estimating the source of the trillions of Dollars needed to make good on the promises.
Investors are already lending billions of Dollars to these projects through bonds. AI related debt is around 14% of all new investment grade debt issuance. Entities with savings are joyfully parting with their money for planned projects that have yet to prove they can make enough money to repay the loans or even generate enough cash flow to pay the interest. JP Morgan's analyst wrote the following about the Oracle deal.
Oracle’s stock jumped by 25% after being promised $60 billion a year from OpenAI, an amount of money OpenAI doesn’t earn yet, to provide cloud computing facilities that Oracle hasn’t built yet, and which will require 4.5 GW of power (the equivalent of 2.25 Hoover Dams or four nuclear plants), as well as increased borrowing by Oracle whose debt to equity ratio is already 500% compared to 50% for Amazon, 30% for Microsoft and even less at Meta and Google.
Here are some other anylist's quotes I found in a Real Investment Advice update.
David Cahn, a partner at venture-capital firm Sequoia, estimates that the money invested in AI infrastructure in 2023 and 2024 alone requires consumers and companies to buy roughly $800 billion in AI products over the life of these chips and data centers to produce a good investment return. Analysts believe most AI processors have a useful life of between three and five years.
This week, consultants at Bain & Co. estimated the wave of AI infrastructure spending will require $2 trillion in annual AI revenue by 2030. By comparison, that is more than the combined 2024 revenue of Amazon, Apple, Alphabet, Microsoft, Meta and Nvidia, and more than five times the size of the entire global subscription software market.
Morgan Stanley estimates that last year there was around $45 billion of revenue for AI products. The sector makes money from a combination of subscription fees for chatbots such as ChatGPT and money paid to use these companies’ data centers.
Right now, there is no visible pathway forward to repay all this borrowing and spending. These big players have lots of cash on their balance sheets that they used for stock buybacks. These buybacks are the biggest source of demand for shares. If the money goes into data centers and the buybacks stop, what happens to stocks? Now, there is more and more grass roots opposition to data centers. America's Growing Pushback Against Data Centers | ZeroHedge
Who wants their neighborhood ruined, their local aquifers drained and their electricity prices to go through the roof to add to the profits of OpenAI, Google, Meta, Microsoft and Oracle? You can follow the revolt here - $64 billion of data center projects have been blocked or delayed amid local opposition — Data Center Watch
On the left is an MS graph showing just how much money non-professional investors (you and me) are throwing at the stock market. On the right is graph showing the volume of trading in Call Options that speculators buy to take advantage of rising prices. Much of this volume is in one day options that expire at the end of the day. On many mornings the market opens lower then mysteriously recovers, hitting an afternoon high before fading into the close. Many times, this follows the buying impulse of one day options. When a speculator buys them, dealers on the other side hedge their sales buy buying some of the underlying stock. In past markets this had a minor influence on the price of the shares. Now, because of the sheer volume of options trading, the number of shares that dealers have to buy makes a big difference and drives the shares higher. It creates a self fulfilling loop totally unrelated to the fundamentals of the companies. Call buying is most focused on the big tech and AI names.
Is there any indication that the "buy every asset" surge is running out of steam? On the left is a graph from the St. Louis Fed showing the money in their reverse repo facility. During COVID, the Treasury and Fed put so much money into the system that banks were overflowing with cash and had no place to put it. The Fed allowed them to park it at the Fed and get paid for doing so. That excess cash is nearly gone. Liquidity in the system is often correlated with higher stock markets. Earlier this week, the shares of Vail Resorts, the big ski area, fell after they reported less demand for season passes than usual. Then Ferrari fell after announcing poor car sales. Analysts tell us that consumer demand drives 70% of the economy and lately, the top 10% of income earners account for 50% of the spending. When the top 10% grow cautious it is a problem. What will make them more cautious? A bad week on Wall St. and vacation homes near the ones they own selling at lower prices.
On Friday, President Trump posted that China was sending out letters to a number of countries regarding new restrictive trade policies and that he would retaliate. We have seen this back and forth kind of action between the U.S. and China in the past. Optimists say it is positioning for some kind of negotiated grand bargain between the U.S and China. The markets didn't see it that way and hit the skids.
Bitcoin trades 24/7. On Saturday it plunged. V.P. Vance tried to soften President Trump's message on Sunday Morning and Bitcoin recovered a bit. As I type, it is down over $10,000 from its high a few days ago. Other crypto coins also plunged with some low price alt-coins losing nearly all of their value. Reports are that investors have lost billions of Dollars. This does not mean that they can deploy that money in other assets. It means that those Dollars (or whatever currency) are gone.
Why the big moves over the usual tit for tat posturing between China and the U.S.? In the last couple of months I included graphs showing the historically high valuations in stocks. Two weeks ago I posted some graphs that hinted at tops in a few markets. Recently, all asset classes rallied and as shown above, retail participation rose to never seen levels. If economic statistics were firm, it was a sign that future earnings would justify current prices. If the stats were weak, it meant that the Fed would slash rates, adding liquidity to the system that would end up in the stock market. Everything was a "win, win" call. Traders' use of leverage went through the roof via options, one day expiration options and leveraged ETFs
Will this weekend's swoon be one more quick pause before higher prices? The future is impossible to know, but here are some chart reasons why I am worried that we could be in for rough sledding.
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The daily graphs above show the S&P 500 and Dow Jones Industrials from April's lows. The yellow rectangles show the trading during September. A lot of traders are "swing traders" and even if they don't use this discipline as their primary tool, they include its theory in their package of tools. When stocks close below the previous day's trading range they are said to have made a daily swing high which is an early sign of weakness. When they close below the range of the last week of trading they form a weekly swing high which is a more serious sign of a top forming. On Friday, both the S&P 500 and Dow Jones Industrials closed below the previous week. Monthly swing highs are very serious business. If stocks continue to sell off next week and trade below the yellow shaded area they will form monthly swing highs and even non-swing traders will turn bearish. The red arrows on the S&P 500 graph mark theoretical 39 day trading cycle lows as theorized by Cyclesman.com, my favorite market newsletter. On Friday, the S&P 500 closed below the previous cycle low 12 days after the 39 day low. Purists will refer to this as a failed cycle which implies lower prices into the 39 day period which is 27 trading days from now in November.
The NDX 100 made the same kind of weekly swing high. The Russell 2000 did better, probably because its individual stocks were not part of the speculative mania and are not as leveraged with ETFs and options.
Using charts to speculate on longer term future moves is rarely profitable but it is entertaining so why not do it? The S&P 500 is the most widely benchmarked index in the world so I use it. The March 2009 low was the last major low. If you are an Elliott Wave fan you look for a five wave advance. Waves 1,3 and five are up. 2 and four are counter trend moves. One of the waves is usually "extended" and you can count five completed waves within it. The upper left side graph is a very bullish interpretation of the tea leaves. Following red wave 3, stocks traced out an expanding triangle. These patterns usually lead to a final exuberant burst. This one is very extended. We finished or are close to finishing wave 3 of the final move. Wave four could be a "chop 'em up" kind of back and forth thing with a final up move in the next year or two.
The right side interpretation is that the expanding triangle was the fourth wave of the third and that we have been in the final up move. The extremes we are seeing in speculation look like fifth wave kind of theatrics.
The chart just to the left shows the action following the expanding triangle with the more bullish markings. Cyclesman.com says that there is a four year cycle, from low to low that repeats over and over again. Some cycles run a bit long and others, short. The last cycle low was in October of 2022. The next one is due in 2026. A major indicator of a four year cycle top is a monthly swing high so watch the daily graphs above.
Of course, if we get an early morning social media post from our President saying that he had a great conversation with Chairman Xi and they both agreed to pull back on retaliatory trade moves, all this analysis will be for nothing.
The left side graph shows the yield curve on U.S. government debt. The orange line is the latest with rates falling late in the week as stocks crashed. The right side chart shows the history of rates on the popular 10 year Note. Despite the predictions of lower rates, the graph still looks like a sideways consolidation before another up move in rates.
A couple of months ago you couldn't find a single analyst who liked the Dollar. One could make the case that it finished a simple down, sideways, down correction. On the right is the recent action. The two a,b,c sections look more like part of an upward correction than a major bottom. 100 then 102 should be resistance.
On the left is an update on the daily bars of spot gold in NY with the percent gain or loss in the U.S. Dollar added. It made a classic contracting triangle with a very robust burst. This should lead to a top and reversal. Last week, gold sold off a bit but it is too early to know if this was "the top." On the right is the weekly closing price of spot gold in NY with a simple RSI oscillator below. Past oscillator readings of .90 were coincident with tops, even if they were temporary. Gold fans like to think that stocks can crash while gold gains. In past updates I showed graphs of the two together. Over time they are fellow travelers. Platinum and Palladium had good runs on gold's coattails but it is unlikely that they will continue to extend to the upside if gold sells off. The exception would be if violence and work stoppages break out at S African mines.
I am sticking with my theory that silver does best (and so do mining stocks) near the end of a precious metals rally. I can't buy silver when it is in red dot territory.
Energy traders have a delicate balance to weigh. Most surveys show a glut of crude on the world markets but what happens if war breaks out? With a potential peace deal in the Middle East, some of the war threat diminished and oil sold off. Natural gas hit the skids too after domestic supply and consumption stats didn't look good. The recent hot weather kept prices up for a bit. The next thing to watch will be cold fronts that bring winter heating season with them.
To the left is the big energy ETF, XLE with oil in blue. Despite lower oil prices, investors bought energy shares. They dumped them on Friday, along with everything else but they are still rich relative to oil. There is a seasonality with oil. Historically, it tends to be weak into December and sometimes into January. For those of us waiting for a pullback in the shares, we might get our opportunity to buy near year's end or early next year.
Looking for something to buy low? Grains are the thing to watch. Above are 15 year graphs of soybeans and wheat. Both are not that far above major lows. Soybeans might be making a contracting triangle for a final burst lower and traders are afraid that if the trend toward peace spreads to Ukraine and Russia, there will be no issues with their huge wheat supplies. No matter what happens with wars and trade deals, grain prices are a function of crop sizes and that depends on the weather. This year was a great growing year for grains with few weather problems. History shows that this is unlikely to be the same in the future.
Best Guesses -
Stocks - The weekly swing high and taking out of the last 39 day trading cycle low does not look good. Neither does the extreme retail participation and extreme bout of speculation and leverage. A sour Friday usually leads to lower prices sometime Monday. The administration is already trying to walk back the China tweets. Let's see what tomorrow brings.
Bonds - Weak stocks will help bonds temporarily but longer term rates are going up all over the world as investors realize that governments have no plan or willingness to cut spending. They might be able to push the short end down but the longer end of the curve requires confidence to do better.
Dollar - We got our rally but it could be part of a sideways correction that last months. We need to see something above 102 to gain confidence.
Gold and Silver - I am looking for a top. With the weekly RSI at .90 it is a dangerous time to buy. With everyone highly leveraged through options or leveraged ETFs, losses in one asset class tend to spill over into everything else.
Commodities - Repeat warning - I am talking my book. After 7 good years come the 7 lean years. In grains, we are due. I am a Natural Gas fan. Winter is coming.
Oil - Let's look for a seasonal low and major buying opportunity in energy over the next 3 months.
Best of luck,
DBE