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
June 20, 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 biggest event of the last two weeks was a Memorandum of Understanding between the U.S. and Iran that allowed the Strait to open. It sparked a big stock market rally and a selloff in energy related commodities and stocks. Right behind it was the Fed's transition to Kevin Warsh as Fed Chairman. Since the collapse of the huge Long Term Capital Management hedge fund in 1998, the Fed's response to any crisis was to buy debt securities to keep interest rates artificially low, expand their balance sheet and flood the financial system with money. Most of that money created a bid for stocks, bonds and real estate, making those who already owned assets richer while not stimulating the real economy. This was particularly true after the Great Financial Crisis during the Obama years when markets rose in response to massive liquidity injections but the real economy suffered under misguided policies and real wages deteriorated. During those years, inflation was held in check because of cheap imports from China and other Asian countries while our industrial base and good paying jobs continued to shrink. Kevin Warsh has been a long time critic of flooding the system with cash and pumping up asset prices. His focus is on keeping inflation low while maintaining adequate liquidity in the banking system to prevent liquidity crunches. If stocks start to tumble, he is not going to try and save the market. He has also been a critic of offering forward guidance on policy because it is often wrong and by definition, cannot account for new data that will change the Fed's stance. In line with this, he is a critic of the constant speech giving and interviews granted by Fed Governors because it causes the markets to focus on what this or that Fed actor is saying rather than reacting to economic statistics. There have been many mornings when stock index futures jumped or plunged based on a Fed Governor interview on one of the financial networks. Warsh would like to put an end to this.
Analysts are interpreting all of this as an indication that in the future, the Fed does not have the market's back and that Fed policy will target inflation.
The orange line on the left side graph shows the current yield curve. Shorter term rates in the area of the yellow rectangle rose a bit and longer dated maturities fell, expressing confidence in a Fed that will pay more attention to inflation. The green line on the right side graph shows the spread between the 10 year note and 30 year bond. It has been falling lately in anticipation of the new Fed chairman whose opinions are widely known. If negotiations with Iran proceed, oil flows and there is less Fed talk, investors will have to pay attention to economic statistics again.
On June 10th we got May's Consumer Price Index. The headline rate (left) hit 0.5% month over month and 4.2% annually, in line with expectations. Energy accounted for around 60% of the increase. Many of the core goods that go into the calculation fell including drug prices. The Core reading (right) that subtracts food and energy rose 0.2% for the month and 2.9% for the past year with Services leading the way.
Rent and housing inflation rose again (left) and with energy costs rising, inflation adjusted wages went negative (right).
Producer Prices were released on June 11th. The May number (left) was hotter than expected coming it at 1.1% for the month and 6.5% for the year with services leading the way. Gasoline contributed 23% of the rise. The Core number (right) was up .04% monthly and 4.9% annually. Prices paid by businesses for basic commodities rose sharply.
Industrial Production rose only 0.1% in May (left) but April's number was revised up to 0.9% leaving the year over year rate of increase at 1.67%. Capacity Utilization rose again (right).
Existing Home Sales (left) were stronger than expected, coming in at 3.2% for May. April was revised higher, from 0.2% to 0.7%. Inventories of unsold homes continued to rise in many states. Housing Starts (right, upper half) plunged, falling by 15.4% in May. Building permits also fell by 0.7%. Multi-family units in particular were weak. Analysts blame it on high interest rates and the increase of unsold properties that compete with new construction.
New Claims for Unemployment benefits (left, green line) fell slightly to 226,000 and are comfortably in the lower end of their long-term historical range. Continuing claims (right side, red line) rose to 1,810,000. Employment analysts will be watching this number closely to see if the labor market is finally weakening. It is still at the lower end of its range.
These are the markets I am watching this week. #1 - Oil
Two weeks ago, I was worried that the sideways trading in crude oil would lead to a spike higher. The "deal" inspired move below $78 invalidated that pattern. The right side graph on the right shows the history of draw-downs or additions to U.S. inventories in private hands (aside from the Strategic Reserve) on a week by week basis. The latest data is for the week ending June 12th. Crude Oil (top row) was down by 8.263 million barrels. Oil stored at the massive Cushing Oklahoma facility fell by 1.5 million barrels. Cushing is the biggest location for oil that is good delivery against WTI futures contracts. The huge gulf coast oil refineries use it as a source for feed. The last time it was this low (directly to the left) was in 2014 when oil was trading near $100 in 2014 dollars. The third row in the inventory graph is for gasoline and the fourth, for diesel. Private inventories are 6% below the five year average for this time of the year. Gasoline is also 6% below and distillates (heating oil, diesel and jet) are 13% below. Refineries ran at 96.7% of their capacity, a very high operating rate.
Gasoline and Heating Oil futures fell after the agreement. To the right is a graph showing the week by week total crude oil inventory numbers for the United States. The blue area is for our Strategic Reserve. For the last 8 weeks, the reserve lost 7 to 9 million barrels per week for a total of 75 million barrels since the outbreak of the war. Nearly all of it is being exported to Europe. We are also exporting large quantities of diesel. Reserves in the rest of the energy consuming world are in similar shape with draw-downs estimated at 163 million barrels per week. We reached an agreement with Iran because the U.S. reserves were 4 weeks from running dry as were reserves in many countries and Iran was close to shuting in their oil wells. Once a well is shut down, it clogs and when it reopens the production from it is less than before the shutdown. Both sides were looking at a crisis and the only solution was to get the oil flowing again. It will take two to three weeks for the ships that recently left the Persian Gulf to reach destinations and it is likely that demand from the U.S. will hold steady until traders are confident that the agreement is real. Current oil futures prices are close to where they were before the war, but world-wide inventories are drastically lower than they were in February. Every country with oil tanks will start rebuilding inventory. China held off deliveries of crude during the war because they had at least 200 days of supplies in storage. They will begin buying again. We did not sell the oil from our Strategic Reserve. We loaned it to refineries and traders and are charging them for the loans. As demand for exports from the U.S. slow, they will buy oil in the open market to repay the Strategic Reserve. Demand for crude oil will be robust for months. My guess is that oil's current "we have a deal" price does not reflect the supply situation and future hoarding demand that will follow, even if the Strait remains open.
#2 - The Dollar and Precious Metals.
The right side graph of the Index shows a down move followed by the expanding triangle. Two weeks ago I was watching the Dollar Index for the completion of the expanding triangle (pennant) formation. It did so last week with a poke above the upper trend line. Predicting the world by textbook chart patterns is not logical because interpretations of lines and squiggles are very subjective with viewers often seeing things that match their trading positions. Even so, it is fun to do, so why not? If reality follows art then what should follow is a sharp selloff to new lows then a reversal to the upside. This is important for gold and other commodities because gold often moves opposite to the Dollar. The upper left side graph is an update on the correlation between the Dollar and gold. The red line shows the Dollar upside down so that when the Dollar gets stronger, the red line goes lower. I have no idea what would cause the U.S. Dollar to sell off. As I type, there is nothing in the news that would trigger it
Perhaps something will happen with the Yen. The Bank of Japan intervened in the market in May to stop the Yen from weakening against the Dollar and Euro. It worked for a few days but as soon as the bank stopped buying, the Yen resumed its dive. The only thing that will stop it is a big policy shift to let interest rates rise in Japan to catch up to the rest of the world. If the bank does this, the Dollar will sell off and repercussions will be felt across markets. For years, hedge funds have been taking advantage of lower borrowing rates in Japan by converting Dollars and other currencies into Yen and using those deposits to borrowing at close to zero rates and place very leveraged bets on U.S. stocks and Treasury Bonds. Two summers ago, when it looked like the Bank of Japan was tightening, there was a flash crash in stocks as hedge funds rushed to the exits. Will we see the same thing this summer?
The setup with gold is not perfect. Cyclesman.com's 23 trading day cycle timing band starts next week with the middle of it on June 26th and the red RSI momentum oscillator (left side daily graph) is not as oversold as it is on the best buying opportunities. The RSI reading on the weekly graph (right) is in the range of good buying zones in past cycles but not yet at an extreme. Seasonally, gold and silver tend to hit lows near the end of June and have a good July so even if the setup is not perfect it might be "good enough for government work."
Silver is not as oversold as I would like for an entry point. However, we are in an 8 year cycle that started in 2025 with the first four years being positive. July is one of the better months to own silver and many people follow these cycles and time frames. They will try and front run the setup and buy a bit early. On the right is a 2 hour bar chart of gold with my subjective markings. Gold looks like it made a favorable five wave up move from its low. Now, it is finishing an a,b,c correction that pulled it into oversold territory going into the weekend. Above, I wrote about Kevin Warsh taking over at the Fed. It is widely believed that gold will not do well under Warsh which is one reason it sold off recently.
Platinum and Palladium are following gold but on a somewhat weaker basis. Both fell below their 200 day moving averages recently which means that hedge funds are less likely to be buyers. A few good days at the track in gold will bring them back to life.
#3 - AI related stocks
On the left is a simple line chart showing the hourly rental cost of Nvidia's Blackwell chip for cloud computing. You can find this data and graphs showing the rental history for Blackwell along with other AI computing chips at - Live GPU Price Comparison: H100, A100, B200 Rental Costs Across 30+ Providers | Mercatus
Soon, there will be a futures contract based on the hourly rental costs for a basket of chips. On the right is CoreWeave. They are in the business of providing cloud-based access to Nvidia GPUs, focused on AI tasks. Any weakness in rents paid for access to the latest chips will be reflected in CoreWeave. The whole AI build out story assumes that future demand for AI will be limitless. The big players like Google, Meta and Oracle are using their cash flow plus borrowing heavily and issuing additional shares of stock to buy more chips and build more data centers. They are also using off balance sheet financing and expensive lease agreements for data centers that are yet to be built. In past manias, over-the-top spending coincided with peaks.
Most of the business capital expenditures in the last two years in the U.S. were related to AI. This morning, I was listening to an interview with a maker of aluminum bicycle parts. He said that the price of aluminum went up over the last five years due to various shocks with the latest being a major producer in the Middle East unable to ship product to consumers through the Strait. He said that the biggest underlying reason is the data center build out. It is the same for everything else related to data centers so the builders and financers of them are paying top dollar for everything. How much are you and your company willing to pay for AI and how will it ever be enough to repay the billions being borrowed plus the expensive on-going costs of running these facilities? If per hour GPU rental costs turn down before most of the data centers are completed, indicating less robust demand, will they all be built? Because of the billions of Dollars involved, especially the debt, a lot of the future of the economy hangs in the balance.
On the left is the latest on the S&P 500. My theory is that it traced out an expanding triangle followed by a final thrust. When I viewed the charts this weekend, I was surprised to see that it did not take out recent highs. The NASDAQ 100 didn't either.
The NYSE Composite manged to hit new highs then closed the week below its February top. The Dow Jones Industrials did well but momentum (RSI green line) is not confirming the price action. Last week, I listened to a few investment podcasts while waiting in airports. Some of the skeptics who have been warning listeners about a bubble and crash, now say that stocks are unlikely to have a major sell off because the fundamentals of the economy look so good. When the professional bears throw in the towel it's time to worry.
Our stock market is a leveraged momentum market. Single day options trading exploded in volume last year with a handful of favorites getting most of the play. When this volume of buys surges every morning, dealers have to buy the underlying stocks as a hedge. Due to the way that options work, they buy a fraction of the shares in the options contracts but the volume is so huge that the amount of shares purchased runs the stocks up during the day. As the rally continues day after day, traders become bolder, taking on more and more risk by borrowing against positions to buy more. This shows up in the margin statistics. We now have leveraged ETFs and leveraged single stock options. These leveraged bets are not included in the official margin statistics so the risks are even higher. Building a portfolio involves having positions in assets that are not correlated but lately, the popular stocks and market measurements are all trending together. Last time I showed how copper, the NASDAQ and Goldman Sachs move together. Where do you go to diversify?
One place to look is agricultural commodities. When the Iran war started, fertilizer ingredient shipments from the Middle East stopped. Last month I saw a short documentary on how one of the major producers rerouted his shipments across land to a port on the other side of the Strait. His trucks were running 24 hours a day, easing the supply crunch. In North America, our manufacturers quickly responded. On the left is a graph of the spot price of Urea, a key nitrogen fertilizer ingredient at New Orleans. It is back to pre-war levels. Fertilizer companies like C F Industries rose along with prices and are selling off in response.
Hedge funds are liquidating crop related long positions that they bought when the war broke out and prices are down, especially corn.
Above are ETFs that track corn, soybeans and wheat. ADM's price tends to follow corn and soybean prices. It rallied along with those grains earlier this spring when stories about the war and El Nino hit the news and the weather for our grain belt looked poor. Since then, it rained more and crop conditions improved. Corn and Soybeans tend to bottom when these crops mature. Wheat has seasonal lows in a couple of weeks. If corn and soybeans follow seasonal trends, you should be able to buy them and ADM at better prices. If they start to rally and go against seasonal patterns then crop conditions here or in some other major grain belt on the other side of the world are deteriorating. Over the last couple of years there were many nights when the Aurora Borealis was visible. It was so common that there are tours offered to the best places to view it. This is because the sun is at an 11 year cycle peak in activity . The extra energy ejected by the sun warms all planets. Throughout history, warm periods were good times for crop production and low food prices and human life. As the sun cycle turns less active and temperatures recede we may not be as lucky.
Best Guesses:
Stocks - I am sitting on the sidelines for now. I don't like the risk/reward ratio going forward.
Bonds - The 5% range on longer dated bonds is holding for now. If there is a crack in the AI story, more money should flow into bonds.
Dollar - We are at the "e" point on the graph. I have no idea what would spark a Dollar sell off but I am watching for it.
Gold and Silver - July is often a favorable month. If you buy now, at least you are not buying the high.
Commodities - Watch the seasonal patterns in grains. Wheat's turns up at the end of the first week in July.
Oil - The "deal" sell off is overdone relative to the low level of physical inventories around the world. I am looking for a bounce.
Best of luck,
DBE