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. 26, 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.
Two weeks ago, market watchers were focused on the prices for crude, gasoline and diesel. Stories were increasingly hysterical, predicting much higher prices. The level of coverage suggested that we were near an inflection point, even if temporary. This proved to be correct as shown by the graphs of spot Oil, Gasoline and Diesel prices. More ships made it through the Strait and there are reports that we are negotiating with Iran.
One theory is that Iran will try its best to keep the Strait closed and prices high until after the election to help Democrats win. However, Iran could also reason that now is the time to extract maximum concessions. With voting five weeks away, the Trump administration might be willing to bend the most now, hoping that prices will fall before voting starts. No matter who wins, President Trump will still be in power for two more years. If there are big losses in the election, Iran could worry that he will blame them and have no reason to come to any agreement.
A chart wonk will notice that the most recent high in gasoline and crude fell short of last spring's tops. Diesel, which is most impacted by Ukraine's destruction of Russian refineries and the subject of most energy related hysteria, performed the best.
The Fed met on Tuesday the 15th then announced its rate decision at 2 PM on the 16th. Last month's core inflation numbers were lower than two years ago when Chairman Powell lowered rates to help Democrats win the election so some were hoping that despite higher oil and food prices, the Fed would take a wait and see attitude and hold off on a rate hike. Those hopes disappeared on Wednesday morning after the latest reading on U.S. Retail Sales. July's number was negative and with all the talk about a K shaped economy and recent surveys highlighting consumer discontent, analysts were expecting another poor number. Instead, headline retail sales (left) came in at 1.2%, one of the better gains for the year. When you subtract sales of gasoline and cars (right side) it rose even more to 1.4%. No matter what consumers are telling pollsters, they feel good enough about how things are going to spend more on current consumption. After the data release, bonds fell (rates rose) as the last hope for a rate pause disappeared.
At 2 PM the Fed announced a quarter point increase to Fed Funds, the rate at which they lend overnight to huge banks. The longer end of the curve backed off for a few days as traders reasoned that the Fed is serious about fighting inflation. Critics wrote that the current cause of inflation is from energy prices and governments around the world borrowing and spending on infrastructure and defense which is increasing the demand for "stuff." Raising rates does not increase the supply of anything. In fact, it only raises costs for businesses and these costs get passed on to consumers in the form of higher prices that show up in future inflation. Last week, medium term rates rose despite moderating oil prices. This happened all over the world as bond buyers demanded higher returns. In the U.S., the Treasury auctioned off billions in five and seven year notes. Both auctions were poorly received with lower bid to cover ratios and muted foreign buying. Some analysts wrote that the world was finally rejecting U.S. paper. It is more likely that because rates are rising everywhere, foreign buyers are able to get competitive returns in the sovereign debt of their own country. When they buy U.S. debt, they have to hedge the currency risk which is an extra cost. If they can make enough in securities issued in their own currency, U.S. Treasuries are less attractive. Near the end of last week, commentators began asking if interest rates would continue to rise, even if oil backed off.
The blue line on the left side graph shows how the yield curve finished last week. Rates in the 2 to 7 year range rose the most and this is the part of the curve that is used to price a lot of business loans. There are trillions of Dollars in loans that were taken out when rates were close to zero, that have to be refinanced over the next two years. Will the cash flow from borrowers support commercial lending rates in the 8% to 10% range? The chart on the right shows rates on Ten Year Notes and Thirty Year Bonds and the spread between the two which continued to fall. This indicates that rates are rising more quickly in shorter duration loans because of increased borrowing demand as opposed to worries over a sovereign debt crisis in the U.S..
Most loans are issued to refinance existing debt and are required to be collateralized. U.S. Treasuries are the favored form of collateral. The MOVE Index is the VIX for bonds and is a measure of traders' perception of future volatility. Just like the VIX, when it goes up, they are afraid of bonds going down. When the Move Index rises, lenders discount the current value of Treasuries when they are used as collateral which makes credit tighter. SOFR stands for the Secured Overnight Financing Rate. It is what you will be charged if you post Treasuries as collateral to borrow overnight. The yellow rectangle is the current Fed Funds range. In a market well supplied with liquidity, the SOFR will be in the middle of the Fed Funds range. When the Fed raised its rate, the cost to take out the most conservative of all loans rose with it, another credit tightening event. Every pod-caster I listen to and analyst that I read, focused on the problems in the debt market and predicted higher rates. Two weeks ago, they were all talking about oil going much higher. My conclusion: just as we were close to an inflection point in oil two weeks ago, we are probably near a short term top in rates.
My Dollar fantasy trade is still a possibility as long as it doesn't take out the "e" of the expanding triangle. Higher interest rates helped the Dollar last week. The Yen got a bid at the end of the week after the Prime Minister made a comment that was interpreted as an OK for higher interest rates.
Last time I included the left side graph in my Best Guesses section. It shows the similarity between 1987's moves and our current market. Something drastically bad would have to happen this weekend for a collapse next week. The S&P 500 graph shows that we held above July's lows at the most recent Cyclesman.com 39 trading day low. From red point "4" the market should make a five wave advance. It made a small one and bears will say that we are headed down from here. However, it could be that it was just the first leg of a much larger advance. A breakout above the green line will increase the up side odds. Could we have a repeat of 1987? One reason it would be unlikely is the nature of investing in general. In 1987, most of the money in the stock market was managed by institutional money managers who bought and sold stocks based on their expectations of future price action. In the 1990s, Index Funds became popular and that trend is still playing out. The expert in this shift is Michael Green. Here is a link to one of his interviews on YouTube - Michael Green on Peter Thiel, SpaceX, and Inefficient Markets . His observation is that 55% of the money regularly invested in the market goes into Index Funds with Vanguard's S&P 500 Index fund leading the way. Discretionary money managers are managing a much smaller percent of the investment money than they used to handle. This means that every month, funds flowing into 401K plans automatically go into the S&P 500 in proportion to the weighting of the index. Currently, Nvidia is 7.71% of the Index so for every $100 that goes into the fund, Nvidia gets $7.71. The top four companies get $24.03 of every $100. This is the opposite of "value investing" because there is no consideration of valuation or future earnings. It is an automatic transaction supporting the prices of the largest companies in the world. This is why warnings about the high valuations of the top companies don't make much difference. If there is some bad news, the market sells off as discretionary managers unload but the "passive bid" as it is called, returns on schedule every month. The amount of that bid is a function of employment because most jobs offer 401K plans and most people end up in funds that are index funds or own most of the same stocks. If a catastrophic event takes place this weekend, the percent of money in the hands of those who have the opportunity to sell could cause the market to have a significant decline but with 55% simply long the index, it is unlikely to be as damaging as 1987 unless it is so bad that millions of workers and retirees switch out of index funds and into cash over the next week.
The graph of the Dow Jones Industrials does not look as good as the S&P 500. It took out the July low around the Fed decision day. Below it is a McClellan Oscillator. I recently started subscribing to the McClellan website. The owner, Tom McClellan is the son of the inventor of this measurement of stock market participation. Aside from the simple oscillator, there are derivative oscillators like the Summation Index available on many trading platforms. He points out that in up trends, low points in the various oscillators are decent entry points. He is also a fan of the ten year and mid-term election year cycles. Years that end in 7 tend to be very good years and lead to tops in the year that ends in 8. Stocks often bottom a few weeks before a mid-term election then rally into the next year with small caps such as the names in the Russell 2000 leading the way. It is impossible to predict the future using historical patterns and often, when they become popular, the market does the opposite because everyone acts ahead of time in anticipation of gaining from a "sure thing."
Books on chart patterns make it sound like all you have to do is memorize them and you can make money. It doesn't work that way because one person's break out bull market is another analyst's major top. It is all subjective. The S&P 500 did better than the Dow Jones Industrials because of the weighting of AI related stocks. More companies sold off than advanced over the last two weeks! If something happens to the AI trade, watch out below! The graph of the NASDAQ 100 includes annotations of a "what if?" type. What if a rally early next week finishes an upward leg of a larger A,B,C correction? Below the price graph is a simple RSI momentum oscillator and we are close to over bought levels. Within the tech sector, semiconductor names are the hottest. SMH is the most popular ETF for playing this group. Over the last two weeks, a couple of big data center projects were put on hold due to public opposition. What happens to the thousands of chips purchased for these buildings and the loans taken out to finance them? Others are also facing opposition or not enough power to run them. Last week, Open AI and Anthropic both lowered input and output token prices in response to much cheaper Chinese open source models that are just as good for most tasks. Meta introduced Muse, a free AI agent that can schedule your trips and do your shopping. Users who want more intense use will have to pay but as with other free software, it puts downward pressure on the whole industry. Much of our economic growth is levered to the success of AI and the payback is still in question.
Directly to the left is a graph of Dow Chemical. If the economy is strong and the demand for materials is great, why are Dow and other specialty chemical makers not doing that well? The answer is that China, the most advanced and automated manufacturing country in the world is moving up the value chain of products. They used to make base chemicals used in intermediate products. Now, they are also making the intermediate products. They want to do the same thing with computer chips and AI. When Anthropic and Open AI called for "regulation" what they really wanted is for the government to designate their expensive models as "safe" and label cheaper Chinese open source models as a "threat to humanity." Without government protection, will they end up like Dow? Dow still makes money. Open AI and Anthropic are burning through investors' cash.
Above are graphs of gold and silver futures for December delivery. Both hit lows in July and look like they made five wave advances. The chart textbook says that a five wave up move off of a bottom is followed by a correction then at least one more up move. In some years, these metals hit a low in the second half of October. The momentum oscillators below each are not yet in oversold territory. Higher interest rates are supposed to be bad for precious metals but they rallied as rates rose in the 1970s. Sentimentrader.com shows that following a first rate hike, gold tended to be higher 3 and 6 months later.
Platinum and Palladium followed gold but on a muted basis. Both metals are trading below their 200 day moving averages which makes them uninteresting to hedge funds. Seasonal lows usually form between October and December. If you are a user and looking for an opportunity to buy, you don't want to wait for a move above the average when you are competing with commodity futures traders.
Over the last two weeks, commodities in general backed off a bit along with oil. As I type on Saturday there are reports that President Trump is rejecting a deal put forth by Iran. Overnight, Russia bombed Ukraine and on Friday, Ukraine hit another Russian oil refinery. The whiff of good news that seemed to be in the markets last week doesn't have much follow through this weekend. Wheat fell after reports that a group of countries including Turkey are meeting to discuss the safe transit of grains through the Black Sea. It is not clear why Ukraine or Russia would listen to them.
Best Guesses:
Stocks - We got through the widely feared September weeks with minimum damage. Next comes October which also has a bad reputation. Will it be similar to 1987 or will the mid-term election cycle kick in over the next couple of weeks? Given the extremes in outcome, I will keep positions small and use momentum oscillators, selling when hourly bar chart readings hit the top of their range and buying when they are at the lows. When the economy is leveraged to one sector (AI) and dependent on more debt, everything is fragile.
Bonds - It is still all about oil. The number of bond bears you see on TV and listen to on podcasts is similar to the one sided commentary heard in other markets when they were about to change direction. Savers are finally getting a return on their money.
Gold and Silver - I will wait for momentum oscillators to creep into oversold territory before placing any bets.
Oil - Prices backed off last week. The news this weekend does not sound good. If I stop reading and shut off the TV, the charts alone look like oil, gasoline and diesel should back off more.
Other Commodities - Watch for everything to follow oil.
Things you should check out -
1. - Above I have a link to an interview with Michael Green. Be sure to take 40 minutes and watch it. You can also find other interviews with him on YouTube. His detailed analysis (along with the statistics to back it) explains why P/E ratios and other methods of valuation don't seem to matter.
2. - All of us are using AI because most queries use it and many phone answering systems do too. What is it and how did it get started? I had long flights last week and read -
The Infinity Machine, Demis Hassabis, DeepMind, and the Quest for Superintelligence by Sebastian Mallaby. Here is the Amazon link. Amazon.com : the infinity machine sebastian mallaby
Demis Hassabis was born in 1976 in England to a mother who was an orphan in Singapore, rescued off the streets by an English Christian charity. She married a Greek Cypriot immigrant to the U.K. who wanted to make his living writing poetry and music while his wife worked menial jobs to support the family. Demis was an obvious genius from an early age. At around 10 he discovered his first computer and was hooked for life. He saw mechanical tools as things that made it easier for humans, who are limited in strength, to exponentially increase their productivity. He saw computers the same way and became obsessed with making a super intelligent brain based on computing power that could explain the mysteries of the universe that even the smartest humans had been unable to solve. He grew up going to church and believes that solving these mysteries is, in a way, revealing the face of God. He started Deepmind which was eventually purchased by Google. The top scientists in AI are a small club of super intelligent men. They all know each other because they went to the same select universities that have similar geniuses teaching math, computing and courses in neurology. Nearly all of them are especially interested in how human brains function because if they want to build the circuit based intelligence it has to function in a similar manner. Many of them worked together at one point and thought they could use a super intelligent system to make the world a much better place. It is an amazing narrative and after reading it, you realize that Congressmen and Senators with half the IQ of these guys have no idea how AI works or how anyone could regulate it. If you want to know what the driving force is behind AI, how it advanced and what could be coming, read the book!
Best of luck,
DBE