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 10, 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 most watched reports came on the week ending October 2nd. As usual, they had to do with employment and inflation.
On Friday, October 2nd, we got the jobs report for September. The August number surprised The Street with a gain of 162,000. Ahead of the September numbers, analysts warned that much of the August good news was from BLS seasonal adjustments. Ordinarily, August is adjusted lower but for some reason (midterm elections?) it was adjusted higher. They reasoned that September would be lower than expected and they were right. The official September number was a seasonally adjusted gain of 29,000 jobs. August was also revised down by 29,000 jobs (left side graph) and July was also revised lower by 31,000 to a monthly loss of 10,000 jobs! Some asked if the Fed would have raised rates at their September meeting if they knew about these revisions. The unemployment rate rose from 4.1 to 4.2% because more people entered the workforce. The Household Survey showed that 406,000 more people joined the workforce in September so there was a big divergence between the two measurements of jobs (right side).
The participation rate rose for the second month in a row (left side), another good sign for the economy. Hourly earnings rose just 0.1% which is good for inflation. Healthcare jobs were up by 17,000. Over the last couple of years, they accounted for a large percent of new jobs. Much of our federal deficit is because of spending on Medicare and Medicaid and with the elderly population swelling and needing more medical intervention demand for workers is strong. Part time jobs were up by 205,000 and full time by 88,000. One might ask how this can be if the official number was only a gain of 29,000. The answer is seasonal adjustments and spreadsheet magic.
The weekly jobless claims came in at 197,000, the fourth week in a row below 200,000 (left). Continuing claims (red line right graph) are down too. Despite worries about the economy and AI, there is no sign of weakness in the jobs market.
On Wednesday, September 30th we got the big inflation numbers for the month, The Personal Consumption Expenditure Price Index and the Core PCE that excludes food and energy. The orange line on the left side graph shows the annualized reading for the headline number. The blue line is the core. The numbers were a bit better than expected but still above the 2% target. For the month, the core PCE rose 0.247%.
Services, and in particular, costs for cell phone plans and education led the way. The left side graph gives a detailed breakdown. Personal Income was up by 0.2% and Spending was up even more, to 0.9% which means that the savings rate fell again.
The left side graph shows both and S&P 500 manufacturing Purchasing Manager's Survey and an Institute of Supply Management survey. Anything above 50 indicates expansion. Both surveys gave the same message: manufacturing activity is strong. The right side graph shows Prices Paid (thick line with red circle), new orders and business employment demand. All three turned up but analysts were quick to point out the inflationary environment shown by the rise in prices paid.
The left side graph shows results of similar surveys for Services oriented businesses. The S&P result was a lot stronger than ISM with both comfortably above 50. The red line shows recent hard data which has been disappointing. The right side shows Prices paid (top heavy line), new orders and employment. The increase in prices paid was the most discussed of the three.
With mortgage rates above 7% and home prices still in the stratosphere, mortgage applications fell again. The build-out for AI continues to suck up all of the borrowable wealth from around the world in one of the biggest redistribution waves in history. Wealthy people from everywhere are opening their wallets to lend. The money is making its way throughout the economy around the planet. Last week, I listened to a story about the owner of a manufacturing plant in Taiwan who became one of the riches men in the world. His publicly traded company makes drawer slides, the kind of hardware that allows your file cabinet to open and close. His company specializes in heavy duty slides that are used in data center racks full of chips and wires, allowing servers to slide open for maintenance. Our socialists demean "the rich" as if wealthy people are doing nothing with their money. The opposite is true. They are lending unbelievable sums that are being put into plants, equipment and employment.
So, what is keeping money managers from getting a good night's sleep?
Here is one thing. Seventy percent of the rally in the S&P 500, the most benchmarked index in the world, comes from the AI story. This includes the hyperscalers and the semiconductor companies making unbelievable profits.
The small group of winners are heavily weighted in the Index which is why the S&P 500 is near its all time high while many of the individual stocks in the S&P 500 are trading below their 200 day moving average (left). Over the last five weeks there were more new lows than highs on nearly every trading session (right).
The blue line on the left side graph shows the price path of hyperscalers stocks. The red line is the cost of credit default swaps on the group. The line is inverted so when it goes down, bond traders are pricing in a higher probability that the massive amount of debt issued to build out AI will run into trouble. The right side chart shows the complicated circular financing among the same names. The AI trade rests on the future profitability of Open AI and Anthropic and that is increasingly in question as performance competitive, much cheaper Chinese models capture market share. For a detailed analysis, read this: AI's 2008 Moment: Jefferies Sees "Massive Capital Destruction" As Two Cash-Burning Labs Owe Half Of A $2.3 Trillion Backlog | ZeroHedge
Last week, the Financial Times published a story claiming that Open AI's Sam Altman told investors that they were running at a $50 billion revenue rate for 2026 which was $20 billion below what was widely believed. The whole AI story depends on you and the company you work for, deciding that AI will be so beneficial that you will spend lots of money on it. The $20 billion haircut went against the narrative. Semiconductor stocks sold off and so did neocloud companies such as Coreweave that borrow billions of Dollars at today's high interest rates, buy Nvidia chips then rent them out. What is more ominous is the math behind the myth. The lower left side graph shows projected operating cash flow by industry sector. Open AI and Anthropic are projecting trillions in revenue from AI adoption but if you add up all the cash flow from other industry sectors, there is not enough to meet those lofty expectations. The lower right graph tracks Total Factor Productivity Growth (green line). This is a measurement of output that subtracts capital and labor inputs. A factory with X number of workers and Y number of machines might have productivity of Z. If they add 25% more machines and 25% more workers, their output will increase but if the output is not greater than the increase in machines and labor then the Total Factor Productivity Growth is zero. If the output is greater, it means that output is rising more than the capital and labor inputs. So far, despite adoption of AI, Productivity minus more inputs is flat. So, what is keeping money managers awake? To keep up with the S&P 500, they had to concentrate their portfolios in the same small group of stocks keeping the index near all time highs and if the economics behind the AI story start to crack, they are in trouble.
The difference between the S&P 500 and the broad based NYSE Composite is striking. Is there a counter argument that is more encouraging? Yes. Both graphs above have a McClellan oscillator. This measures the difference between two differently weighted exponential moving averages of advances versus declines. When the market is down but the Oscillator begins turning up from a low level, it means that under the surface, things are improving. The fundamental explanation is that governments around the world and AI related companies have been on a borrowing binge and those trillions end up in the economy, paying for goods and services. Over the next year, this will show up in the earnings of companies far beyond the tech and energy sectors. The graph directly to the right shows the S&P 500 above and hedge fund positioning below. Big money managers have low allocations to stocks which is why market measurements aside from the S&P 500 are near or below their July lows. We are coming into earnings season and good news will move money back into the market. There are also record corporate buy backs scheduled for the fourth quarter.
I subscribed to a twice a month newsletter from Tom McClellan, whose parents invented the McClellan oscillator. He says that there is a mid-term election cycle that bottoms shortly before the elections then rallies into the next year. He also points to a decade-long pattern where years ending in 6 tend to be flat but years ending in 7 do well, led by smaller company stocks. Above are two ETFs focused on small cap names with Relative Strength Index oscillators. There are a lot of complicating factors this year with the wars, energy prices and interest rates back to historically normal levels. Who knows how this will all work out?
The upper left graph of U.S. prices for crude oil shows my fantasy pattern for the future. Guessing future movements is almost always inaccurate but it is fun to do. When it works out it makes for a great "I told you so." Estimates for how much is getting through the Strait are varied It is at least 30% of pre-war levels and possibly more. Here in the U.S., oil in storage, aside from the Strategic Reserve is 1% above the five year average for this time of the year. Ukraine continued to drone Russian oil refineries, cutting the world's supply of diesel and other distillates. President Trump asked them to stop but they refused. On Friday, President Trump announced that Russia would export tons of diesel, unrestricted by sanctions and the price fell a bit (upper right). This depends on the capacity of their refineries and Ukraine not bombing the tankers en route. Prices fell a bit on the news but critics did the math. The first planned release is about a quarter of a day's supply in the U.S. The agreement with Russia was likely a message to President Zelinsky after he ignored President Trump's request. As I type on Saturday morning, there is a report that Ukraine bombed a major Russian oil export hub. Ukrainian Drones Reportedly Hit Major Russian Fuel Export Hub Hours After Trump-Putin Diesel Deal | ZeroHedge
The graph directly to the left shows the results of a Presidential approval pole in green and gas prices at the pump, inverted in red. A lower red line means higher prices. Consumer sentiment polls and Presidential popularity polls tend to track gas prices. This has been known for decades and is why we are likely to see more news about agreements with Iran, even if Iran is not aware of them.
I frequently ask the same question: Would you rather have $50 oil with cheap gas and diesel and Iran getting $2 per barrel for oil going through the Persian Gulf or today's prices with the U.S. spending billions on a naval blockade, putting our sailors in harms way and running down our munitions. Aren't we already paying a very heavy toll along with high prices?
After the weaker jobs report, the probability of another Fed rate hike diminished and rates on the very short end of the curve fell slightly. Everything longer than 5 years rose. Analysts who study the internals of bond market movements say that we are witnessing historic demand for borrowable money from governments and the AI complex all over the world. Because of the tremendous demand, rates have to rise to attract more money. It is working. People who track flow of funds say that there were big inflows in to bond funds over the last month. Mathematically, we are at the point where the interest earned on a ten year note will make up for a couple of percent drop in the price of the bond. On the right is a graph of the yield on a ten year U.S. Treasury Note. If this were a stock, the typical pattern would be a pull back followed by another higher high then a large correction. A thing to remember is that if the AI trade falters and hyperscaler capex plans are cut back, bonds will rally.
On the left is a Bank of America graph showing that 19 billion Dollars flowed into money market funds last week as investors sought safety. On the right is a chart of JNK, a popular junk bond (high yield, the polite way to talk about it) ETF. Bears, looking for the crash will say that junk bonds are crashing because risky companies are unable to roll over their debt at today's high rates and confidence is cracking. Where junk goes today, the stock market will be tomorrow. Bulls will note that previous panic cycles in junk bonds coincided with good stock market lows, two of them in October.
My expanding triangle fantasy trade fell apart last week when the Dollar rose above its previous high. If I were a professional analyst I would just move the "e" to the right and not mention the previous target. The Dollar rose because the Euro fell and the culprit was France. France has the most generous social benefits and subsidies, spending far more than they could ever dream of taking in from taxes of any kind. A couple of weeks ago, French government bonds started falling quickly as traders sold and rates went up. The spread between the rate paid on a French 10 year versus a German spiked higher and the cost of Credit Default Swaps (lower right) on French sovereign debt went parabolic. Their bond market calmed down a bit at the end of the week. On top of the fiscal problems, Muslim high school students are rioting all over France and now, Belgium, joined by Antifa. Read about it here - "Migrants Join Forces With Antifa" As EU Riots Spread From France To Belgium | ZeroHedge So, this is what happens when you offer the most generous benefits in Europe? The next time someone tells you that diversity is our strength, offer them this example.
On the left is a weekly bar chart of spot gold prices with arrows pointing to Cyclesman.com's theoretical 18 week cycle low timing bands. They are "bands" because the lows tend to come in a range of plus or minus a month. The next one is due in mid-November. The right side daily bar chart shows the 21 trading day cycle which is due next week. There is a chance it bottomed early but experience says to wait until we are farther into the theoretical low point.
The simple RSI momentum oscillator on daily closes is not as oversold as I like it to be when considering a buy. Newmont, and other gold and silver mining shares sold off but relative to the weakness in the metal, they are still elevated. Late last week, traders jumped into gold and silver company shares with a small rebound in the metals. October tends to be one of the worst times to own precious metals mining companies and with the 18 week cycle likely still ahead, I will treat any rebound as a trade as opposed to a longer term opportunity. Again, it could be that the cycles bottomed early but this group has a habit of burning optimists.
On the left is a weekly bar chart of spot silver with arrows pointing to the same 18 week cycles. On the right are daily closes with a simple RSI momentum oscillator. Silver is a fickle metal. You give yourself the best chance of making money by waiting for an oscillator reading close to 20. Silver is also vulnerable to moves in the stock market. If money managers decide to dump AI early next week, it will spread to silver too.
In a recent update, I warned that Nornickel's facilities could be a potential target for Ukraine's drones. Nornickel produces 10% of the world's platinum and 40% of its palladium. At the time, I was the only one worrying about this and the prices of both metals continued to fall. This weekend, the rest of the world is catching on - Ukraine's Drones Reach Russia's Arctic "Gas Capital"; Is Nornickel's Palladium Next? | ZeroHedge The plant where they separate and purify their metals is within the range of recent drone attacks as shown by the map. Zerohedge wrote the article after warnings popped up on social media sites.
I also warned that October through December is a frequent bottoming period for these metals and that users would probably not act because lease rates were down again. So far, Ukraine is concentrating on military and energy targets but as they get more desperate, everything that makes Russia money will be considered.
Unlikely events.
On the left is a graph of the S&P 500 following the low last spring. The a,b,c,d,e lettering implies a final burst to new highs. An optimist who sees this weekend's worries as a setup for a buying opportunity will view market weakness as part of a "flat correction" in an up market that takes the S&P back toward point "a". If the bullish interpretation works out, a major rally will follow. On the right is a 3 year graph of Fastenal, the nuts and bolts company. You can also imagine that the trading pattern between the red dashed lines is an a,b,c,d,e type formation followed by an initial up move that is correcting. If the bullish theory gets beyond the artistic stage, the next leg up would be very strong.
The upper left side graph showing the current path of semiconductor stocks and the NASDAQ after its peak in March of 2000 made the rounds last week. The right side graph shows how ups and downs are similar this year to the the fall of 1987. The amplitude is different for reasons explained last week. The final low in 1987 came the first week of December. To the left is a weekly bar chart of the Dow Jones Industrials with arrows pointing to Cyclesman.com's 22 week cycle lows. The next one is due in the second half of November. Correlations work until you bet the farm on them.
Best Guesses:
Stocks - This weekend, there are a lot of convincing articles on what a money loser AI is. I would like to see a big down day or two with the tech and AI names taking the brunt of it while the rest of the market sets up for a recovery. Because of the potential volatility, I will assume I am wrong and keep all positions small.
Bonds - It is still all about oil but if future AI capex and borrowing looks like it will slow down, bonds will rally. Everything having to do with residential real estate which currently looks dead, will rally.
Gold and Silver - We should have a short-term low this week. It might have been Wednesday of last week. I expect any rally to be temporary with another soft spot later in the month or early November.
Oil - Prices backed off last week. The news this weekend does not sound good. The market is probably in a trading range for now.
Other Commodities - Watch for everything to follow oil. If AI falters, copper should too.
Best of luck,
DBE
