one more interesting observation... I think the tree has defensive mechanism against peach twig borer. Pictures are showing what happens... basically at the end of new shoot the tree stops producing leaves and transforms new bud into hard spike. The way the borer normally gets inside the shoot/branch is through top of the shoot... once hard spike is there it's not possible.
I found these spikes all around the tree (older branches as well as this year shoots)... seems this tree has been going through this before... unless I'm not right and the spikes are results of something else.
Now the real question is how to make the tree going again? Shoots are kind of "finished"... if I want to stimulate further growth through second flush of growth what should I do? Cut these like regular shoots and expect same result? Anybody can give me some advise here?