Summary
Phil Anderson argues that reading price action in a curated watchlist is more reliable than following financial headlines for understanding cycle positioning. He uses Coastal Financial Corp (CCB) and the US Copper Index Fund (CPER) as live examples of stocks setting up Mex Pete patterns consistent with the second half of the real estate cycle. He also closes short US Dollar positions after stop losses are triggered, while maintaining a longer-term bearish dollar outlook.
Key Claims
- Stock prices are a barometer for business conditions 6–12 months ahead, per Gann — confidence: high
- Regional bank profits should rise in the second half of the real estate cycle due to increased credit demand, and this should be reflected ahead of time in share prices — confidence: high
- Copper prices tend to spike in the final years of the real estate cycle (referenced to page 369 of The Secret Life of Real Estate and Banking) — confidence: high
- A breakout in CPER above 4.50/lb physical copper) would confirm positioning in the final years of the cycle — confidence: medium
- The US Dollar is expected to weaken in the second half of the cycle, consistent with historical pattern, despite the current rally — confidence: medium
- Reading charts and overlaying the real estate cycle framework can outperform professional forecasters — confidence: medium
Mex Pete References
- Coastal Financial Corp (CCB): Described as setting up a “Mexican Pete” pattern. Stock peaked at $55 in early 2022, retested that level multiple times, made a series of higher lows from mid-2023, and is recently breaking out from the pattern. Breakout interpreted as a forward signal of rising earnings.
- United States Copper Index Fund (CPER): Not explicitly labelled “Mex Pete,” but described with the same structural logic — multiple touches of the 20 level in 2022, and a setup pointing toward an eventual breakout above $30.
Stock Picks / Signals
- CCB (Coastal Financial Corp): On watchlist; breaking out of Mex Pete pattern above $55 resistance — bullish signal, no explicit entry price or stop noted in this email
- CPER (US Copper Index Fund): On watchlist; watching for breakout above 4.50/lb copper); currently pulling back with higher lows intact — no entry/stop noted
- DXY (US Dollar Index): Short position stopped out; stop loss triggered on rally off ~100 support; retained on watchlist to re-enter short later
- UDN (Invesco DB US Dollar Index Bearish Fund): Short position stopped out alongside DXY; same rationale
- UBS Group AG (UBS): On US Watchlist; recently moving above level of interest; holding off on action due to pre-election volatility risk
- Mex Pete Model Portfolio: No other changes; existing open positions maintained with stops in place
Predictions / Forecasts
- US Dollar expected to weaken during the second half of the real estate cycle, consistent with prior cycles; re-entry into short USD positions anticipated
- CPER breakout above $30 forecast as a likely future event that would confirm the cycle is in its final years
- No specific date targets given for either forecast
Notable Quotes
“Rather than sifting through headlines and opinions of what the economy and stock market are supposed to be doing, you should turn to our watchlist instead.”
“As W.D. Gann shows us, stock prices are a barometer for business conditions six to 12 months ahead. Now overlay that with your understanding of the real estate cycle, and you should be able to outfox any ‘professional’ forecaster.”