Summary
Phil Anderson introduces the “Mexican Pete” (Mex Pete) chart pattern drawn from page 67 of Gann’s Truth of the Stock Tape, describing it as an ascending triangle setup where higher lows eventually overwhelm flat-top resistance to produce a breakout. He uses Intercontinental Hotels Group (IHG) as a worked example of the pattern in action, then announces the launch of a live model portfolio built around the strategy.
Key Claims
- Buying high and selling higher is more effective than buying cheap — confidence: high
- “Cheap” stocks are cheap for a reason and rarely represent good value — confidence: high
- The 52-week new highs list is a reliable source of trade ideas — confidence: high
- Moving averages help identify stocks in strong uptrends suitable for entry — confidence: high
- The Mexican Pete / ascending triangle pattern skews risk/reward in the trader’s favour — confidence: high
- The best breakouts gap above resistance and do not return; a retest of the breakout level is common but not guaranteed — confidence: medium
- Observing real-world business conditions (e.g. hotel occupancy) can inform investment decisions and real estate cycle analysis — confidence: medium
- A model portfolio based solely on the Mex Pete strategy can be compatible with holding a separate day job — confidence: medium (aspirational claim, not yet validated)
Mex Pete References
- Definition: Mexican Pete refers to a section on page 67 of Gann’s Truth of the Stock Tape, chapter “Habits of Stocks,” using the historical stock Mexican Petroleum as the example. Gann provides specific dates and prices which, when plotted on graph paper, produce an ascending triangle.
- Pattern structure: Series of higher lows + flat resistance top → buying pressure eventually overwhelms sellers → price breakout.
- IHG example (Intercontinental Hotels Group, U.S.-listed):
- Pattern developed over approximately six months at prior highs around the $70 resistance level.
- Breakout confirmed 18 July 2023 (Point 1) — stock jumped above $70 on high volume.
- Stop placement: just below most recent low inside the pattern at $66 (Point 2) — approximately 8% downside from entry.
- Retest of breakout level occurred late October 2023 (Point 3) — $70 acted as support.
- Subsequent gain from breakout: as much as 53%.
- Rule: If price returns below the breakout level and back inside the pattern, the stop must be taken — no exceptions.
- Stop management: Once trade moves in favour, raise stop to breakeven.
Stock Picks / Signals
| Ticker | Exchange | Signal | Entry Reference | Stop | Notes |
|---|---|---|---|---|---|
| IHG | U.S. | Historical buy example (not a live call) | Breakout above $70 on 18 Jul 2023 | $66 (≈8% below entry) | Gained up to 53% post-breakout; retest at $70 in Oct 2023 |
- A live Mex Pete Model Portfolio has been launched on the PSE subscriber site (PDF linked within email). Specific tickers in that portfolio are not disclosed in the email body.
Predictions / Forecasts
None explicitly stated. The 53% IHG gain is cited as a historical result, not a forward forecast.
Notable Quotes
“The stock market is not a supermarket. ‘Cheap’ stocks are cheap for a reason. And it’s rarely a good one.”
“The best breakouts from a Mexican Pete setup gap above the resistance level and don’t look back.”