November 7, 2026

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 - [email protected]

The selloff in everything having to do with AI took center stage last week. The economic numbers we got were mostly indicative of a strong economy with employment leading the way.

On November 3rd we got the JOLTs data for September. Job openings rose by 333,000 to 7,190 million with the largest contribution coming from state and local governments. Available jobs are estimated to be 414,000 greater than unemployed people looking for work. It seems like a useless statistic because those looking for work might not have the skills that match job openings, however, there has never been a recession when available jobs were greater than those searching for them. Hire and Quits rose too. When Quits increase, it means that workers are confident they can leave their current job for something better. It is considered a positive sign for the labor market.

On November 4th ADP released their employment survey and it showed a gain of 86,000 jobs in October, the 16th month in a row of gains (left). Services providing businesses were responsible for most of the gains (lower right).

189,000 people filed for First Time Unemployment Benefits. This is the lowest weekly reading since 1969. The four week moving average (right side, light green line) fell too. Continuing claims were also lower, at 1,701,000. We just had an election where voters expressed a lot of dissatisfaction, but the demand for workers and willingness of companies to pay people to show up does not get better than this. It is like being at the North Pole where any step you take is South. All that any new management can do is mess things up.

On Friday morning we got October's Non-Farm Payrolls. Given the strength of the other employment measurements, analysts were expecting a good number with the average guess at around a 70,000 gain. The official number was 165,000, far above Street expectations. Most of the jobs came from the private sector (159,000). August was revised up by 53,000 and September by 31,000! They Payrolls Survey looks at tax reporting data. The Household survey is taken by calling homes and asking about the employment situation. In some months, the surveys are at odds with each other. In October, both showed healthy gains (right). The unemployment rate dropped slightly to 4.1%.

The Labor Participation Rate (61.9%) and Employment Population Ratio (59.3%) were little changed for the month. Average hourly earnings were up 0.4% last month (green bars, right graph) and 3.1% for the year. Newly elected Democrats are talking about changes they want to make next year. They would be well advised to think twice about reversing policies that have been very beneficial to the country.

September durable goods orders rose 1.8% (left). The annual growth hit 10%. The Core number which subtracts transportation orders (Boeing) was up 0.5% for the month and 11.6% for the year (right).

Two surveys of purchasing managers in the services sector fell slightly (left), however, anything above 50 indicates expansion. The green line is from S&P Global and the blue, from the Institute of Supply Management. The red line shows the recent trend in hard economic data as opposed to surveys and it trended lower recently. S&P's Composite Purchasing Manager's Output reading was slightly lower (right, blue line) from a high level. The shaded area shows actual economic growth. The two have a strong correlation.

The Bureau of Economic Analysis estimated that the economy grew at an inflation adjusted rate of 3.4% in the third quarter. Spending on data centers led the way with household spending following. Over the last year, billions of Dollars flowed into the economy and the wallets of workers from a handful of companies pouring money into data centers. You see the results above in employment, durable goods, surveys and overall economic growth. On Tuesday, much of the country voted to stop it. Will they blame themselves when they, and their children can't find jobs?

Two weeks ago, I mentioned the widely circulated "mid-term election cycle" and "seasonal cycle" themes. A lot of market commentary focused on them and encouraged investors to buy into the election results, no matter who won. We saw the that on Wednesday. Everything exploded higher and the theme promoters looked like geniuses. Elections matter and Democrat strategists used skepticism about AI and data centers as campaign issues with their candidates amplifying existing fears among voters and promising to regulate, moderate or in some cases, ban data centers. On Thursday, reality hit. Corporate profits expand when there are big spenders. Traditionally, these have been consumers or the government. A few times every century, an investment theme emerges that is so compelling that it convinces wealthy individuals, corporations and governments to open their wallets and on top of that, borrow money to plow into what looks like an investment that will have a huge future payoff. Artificial Intelligence is our current version. The hyperscalers are committing their current cash flows and borrowing billions more to put into it. Our government is backing it. Wealthy investors were lured into private credit schemes to finance individual data centers. Two weeks ago, I included a group of charts showing the problems with the economics of the AI build-out. The platforms of the election winners will make the AI trade look even worse. Most of the hyperscalers have other businesses to cushion their possible losses. The billions that individuals and corporate investors (including insurance companies) put into private credit are in danger and this is a problem going forward. No one is going to cry for "the rich" who plunged into what might be, a big loser. But, the spending of the top 20% of income earners is vital to many industries including tourism, real estate, boats, restaurants, furniture, landscaping and more. When people experience a big loss, they pull back on other things. When losses are very bad, they sell other assets such as vacation homes. Spending on data centers spread across the economy which you can see in the statistics shown above on durable goods and employment. It has been the goose, laying the golden egg. It was the Administration's solution to our chronic debt problem whereby GDP and productivity would grow faster than debt, making the debt to GDP ratio decline. Not only is AI a transformative technology, it has been the driver of our economy and confidence in the future. If Democrats plan to stick a fork in it, the tide will turn. Jobs will disappear. Billions in loans will be in jeopardy and confidence will recede. Socialists will celebrate the wealth destruction of corporations and "the rich," but history shows that when the top 20% take a hit, the bottom 80%, the people that socialists and Democrats claim to represent, do much, much worse.

At the heart of the AI trade is the demand for semiconductors. Data center builders stockpiled them in anticipation of deploying them. Manyl projects are delayed because of limited electricity. With government turning on data center construction, investors are worried that millions of Nvidia and memory chips will never be used and will flood the reseller market over the next few years. Two weeks ago, my theory was that any bounce in SMH, the popular chip ETF would be an upward correction before more damage. The red arrow on the upper left SMH graph points to Tuesday the 27th, two days after my last update. The upper right graph shows the daily closing price of SMH and a five day moving average of its volume. Not only do we have a small group of companies in the chip sector, we also have ETFs with options on them and leveraged ETFs and options on them and single stock ETFs, etc. When things are going up, all these derivative products amplify the gains then work in the opposite direction on the way down. Some previous volume spikes were down-side inflection points.

The graph directly to the left shows the correlation between SMH now and the year 2000 dotcom NASDAQ top. The direction is somewhat similar with different amplitude on the moves. If the correlation continues, we could have a bounce. My guess is that any retracement in SMH will be less robust than the NASDAQ's was.

Two weeks ago, I wrote that the chart patterns of popular market measurements didn't look supportive to the mid-year election cycle theme. Here is a follow up.

My theory was that the S&P 500 was making a "flat correction" in an up market. That bullish interpretation is now in doubt with last week's sell off extending well below July's low. If we take out the red line, the next support level sits near the dashed green line. The NASDAQ 100 is still in theoretical "flat correction" territory with "C" below "A" around the same distance as "B" was above the May top. To keep hope alive, the sell off has to end near current levels.

The more bullish interpretation of mid and small-cap companies is that they will finish an initial five wave sell off then spend a few months retracing half to two thirds of the down moves. The bearish reading of the tea leaves is that my point "3" on both graphs was a finished five wave decline. The "4" is a second wave retracement or the first part of a more complicated "M" shaped pattern before a much larger and more catastrophic plunge.

We could get a bounce next week that recovers some of the loss in the Dow Jones and NYSE, but neither graph has the look of a proper bottom.

To the left is a comparison between this year's market and 1987's. Both made August highs. In a previous update I mentioned that most investment flows are controlled by passive index funds that buy the S&P 500 automatically so a 1987, 20% crash was unlikely. The timing of the ups and downs is similar. I am watching the late November, early December time frame to correlate with a more favorable entry point this year.

Six weeks ago, interest rates were at their highest for the cycle. I wrote that we were likely near a peak because most of the commentators on TV and Zerohedge.com were talking about interest rates. The frequency of them appearing on TV was a tip off. On Zerohedge.com, a high percentage of the articles were bearish forecasts. I find that these are good contrary indicators. Eight weeks ago, the same was true regarding oil prices when oil was at its peak.

The "media" indicator worked and interest rates moved down (bonds up) over the last 5 weeks. The yield curve (the orange line is the latest) is down and IEF, the ETF most correlated with the U.S. ten year treasury note, rallied strongly from it's low. Chart perfection would call for another brief sell off followed by a more robust rally but it could be that the lows are in for now. Despite all the hand wringing over the deficit, rates tend to follow economic growth and if the Democrats have their way, it is about to slow down. Directly to the right is a graph of crude oil prices and the rate on a 30 year Treasury Bond. Oil looks like it leads moves in rates by a few weeks. If the correlation keeps up, we could be in for a bit of an upward move in rates.

By the way, on Thursday, I noticed that more than half the first page stories on Zerohedge.com were about how bad the AI and semiconductor sector are going to be. Does that mean that the worst is over for now?

Despite my skepticism about the Dollar, it continued to do well. Currency traders liked last week's strong U.S. economic numbers. The most heavily weighted currency against the Dollar is the Euro. Young Muslims, communists and anarchists are rioting in European cities, the finances of most European countries are in shambles and the leaders of some of these countries seem determined to start a fight with Russia. Russia is one of the most resource blessed countries in the world. I have yet to hear a good reason why they would want to invade countries in western Europe that need a financial bailout. The next heaviest weighted currency against the Dollar is the Yen. Japan is facing huge deficits with no end in sight. The saying about the Dollar is that it is the best looking horse in the glue factory.

Over time, gold and gold mining stocks (XAU) tend to move opposite the Dollar. The red lines on the left side middle and bottom graphs show the path of the U.S. Dollar Index upside down. When the Dollar gets stronger, the red line goes down. We could have a severe panic where both the Dollar and gold are bought but most of the time, they move in opposite directions. Red lines on the Dollar graph mark popular potential stopping points for a partial retracement.

On the left is a weekly bar chart of spot gold in NY with Cyclesman.com's theoretical 18-week cycle low points. Cycles can run long or short so it is possible that we saw the latest 18 week inflection point at the end of October. The right side graph shows weekly gold closes and a simple RSI momentum oscillator in red. Three of the last four good buying opportunities started with a low RSI reading followed by a lower gold price and a slightly higher RSI. We don't have the same setup now. This leads me to be open to the 18 week cycle low running long with another sell off later in the month.

On the left are daily bars of spot gold in NY and Cyclesman.com's theoretical 21 trading day timing bands for a low. Given the rally at the end of October, it was the daily cycle bottom. The RSI reading (upper right) was low enough to give a low risk trade. During the final plunge we saw a retail trader purge in gold futures with small sized gold futures positions liquidated. I am bothered by the optimism shown by gold mining share investors as shown by out-sized buying on the graph of Newmont and Gold. The best bottoms are times of extreme pessimism when momentum oscillators on weekly graphs are low and mining share buyers are slow to follow a gold bounce.

The next 21 day cycle low is due at the end of November. A disciplined approach would be to respect the current 21 day cycle low, but not go all-in, due to the lack of confirmation by the weekly RSI reading and the optimism of gold share buyers.

On the left are weekly bars of silver and Cyclesman.com's 18 week timing band lows. As with gold, we could have seen it at the end of October. The daily silver graph shows a low RSI reading and subsequent bounce. The industrial side of silver could constrain it now that data center construction is in doubt.

Above are graphs of platinum and palladium along with gold. Just like silver, the platinum group metals have an industrial side to them. When the stock market is down, traders assume it is signaling future weakness in the economy and they sell industrial metals. Above, I show 18 week cycle timing bands for gold and silver. While the exact timing for a major low could be a week ago or possibly into the end of the month, trying to pin-point it is not as important as knowing the season. For those who need these metals it is most likely a buying season. At least you are not making a panic purchase at the high!

On the left is a graph included in a July update. It shows the path of Coreweave stock and Copper. Coreweave is the most followed "neocloud." They borrow heavily, buy Nvidia chips then rent them out. They are the most visible and leveraged type of bet on the future profitability of AI. The July post had to do with diversification. Copper and AI might seem like separate trades but the market doesn't think so. On the right is a weekly bar chart of copper prices using the most active futures contract. Last week, we hit levels seen at the end of January. A few days ago, I watched another podcast featuring a metals analyst who said that the world is running out of copper and it takes 15 to 20 years after discovery to build a new copper mine. Do you listen to sound logic or stay away because of poor tape action?

On the left is a graph of West Texas Intermediate crude oil using daily data from the most active futures contract. The blue lines show my bullish long-term interpretation. Hopefully, I am wrong, we get a peace deal with at least one of the wars and oil sells off. My blue lines predict that the sell off phase should continue toward the lower trend-line. On the right is XLE. the big energy ETF and Oil. All the attention was on the damage in the tech sector over the last two weeks. Energy also got hit. Most hedge funds have to be in winners to beat the averages and their peers so they load up on things that are working. For most of last year, that was tech and energy. Energy was down at least 10% last week and depending on what oil stock you owned, even more. The wealthiest 10% are in those hedge funds and they are the ones taking the hit. You might gloat at the thought, but if your family members work at an expensive coffee shop, restaurant or any of the thousands of service businesses and charities that depend on this segment of the population continuing to spend and donate, it is not good news.

Heating Oil, which trades with diesel prices, and gasoline also saw some relief. Refining capacity is still constrained because of both wars so relief on refined products will only come with an end to at least one of them. Last week I heard more politicians talking about turning away Russian heating oil/diesel from northeastern ports. We have low levels of distillates stored in New England and prices are through the roof! My last delivery cost $5.99 per gallon. Virtue signaling by well paid politicians is stupidity in the face of huge heating bills coming to the elderly and working class homes. Any addition to the supply should be welcomed. If you want to virtue signal, turn your own oil burner off and let your house cool down.

DBC (left) tracks a broad basket of commodities. DBB follows base metals. Both sold off recently and DBB fell below its 200-day moving average. A popular investment theme is that we moved from a Just-In-Time world to a Just-In-Case world. The former is a world with working supply chains, price competition and vendors holding and paying the carrying cost of inventory. Any capital tied up in spare parts beyond next month's demand is wasted money. In a Just-In-Case world you call your regular vendor for a part and he gives you a probable wait time so you double order and start accumulating raw materials and spare parts, vital for your company's operations. You look into backup generating systems and start using the futures and options markets to hedge the possibility of higher prices for the things you need. This, in itself drives prices higher (inflation) because of the increase in demand for more spare parts and raw materials. We might still be in the Just-In-Case world but it could be that spare parts and supplies inventories and double ordering have reached their limit for now and that vendors, who saw record orders in 2025 and 2026 will experience a slump in the next 6 months which will be an inventory adjustment by end users.

Above are ETFs that move with corn and soybean prices. To the left is a Wheat ETF and simple RSI momentum oscillator. Grains are a way to diversify from the AI trade. In previous issues I wrote about wheat prices in particular. Warning: I am talking my book. I use RSI as a long term signal for entry and exit points. Previous low points in RSI were not necessarily the low, but they were within the range where you got a bounce, and some times something much bigger. Think of it as a risk reducing strategy. Based on this, I am edging my way back into WEAT.

Best Guesses:

Stocks - We could get a relief rally in tech but the shock that wealthy investors will get when looking at the damage in their portfolios should vibrate into the end of the month, particularly if energy keeps selling off. I will tread very lightly with a high cash position until I think the dust has cleared.

Bonds - Bonds got a great rally and are likely to pull back. I switched out of some managed bond funds and will sit and watch for now.

Gold and Silver - Hopefully we got the weekly cycle lows, but I need more confirmation. There is still a lot of speculative money in these metals that might have to be washed out. I will sit and watch.

Oil - Two weeks ago, energy looked fragile and we got a sell off. I am going to stick with my blue lines on the crude oil graph. That implies a bit more of a bump up then another sell off toward $80.

Other Commodities - Have we reached the peak of a defensive hoarding cycle? I think so. Grains are down so I am slowly buying .

Real Estate - REAX posted positive earnings last week amid an absolutely frozen residential real estate market. Prices are beginning to come down in many areas of the country. You don't see it in the official averages because the greater Chicago, New York and San Francisco regions are still going up, due to very local housing shortages. As prices fall in many parts of the country, they will fall into a range that allows more transactions to take place. The weakness in the stock market will increase the urgency to sell other assets including homes. Boomers in particular are loaded up on stocks and if they have been thinking of cashing out of homes, a look a their monthly stock statement could be the catalyst. If Remax can make a buck in a market that is slower than the 2008 - 2009 market, how will they do when things unfreeze a bit? Warning: I am talking my book again. The stock is extremely illiquid. You have to place limit orders on buys and sells. I sold on the little run-up into $17 then bought again on Friday after it tanked on disappointing earnings. This is the kind of company that you buy in a very limited way and dream that it will be a big winner while waking up at night, wondering if it declared bankruptcy while you were asleep.

Best of luck,

DBE