Summary
Phil Anderson’s second subscriber Gann email of 2025 contextualises the historic two-day $6.6 trillion U.S. stock market loss triggered by Trump’s “Liberation Day” tariff announcements, and uses Keynes’ Beauty Contest analogy to explain why the Mexican Pete pattern is the correct lens for reading collective market sentiment. The email also updates the Australian and U.S. watchlists — removing JHX and RSM, adding Imdex (IMD) — and flags copper’s cup-with-handle setup as a chart to monitor.
Key Claims
- The U.S. stock market lost $6.6 trillion in just two days following Liberation Day tariff announcements — described as the largest two-day loss in history — confidence: medium (widely cited figure at time of writing; subject to revision)
- Markets at time of writing had only retreated to approximately 2024 price levels despite the headline loss — confidence: high
- A 10% across-the-board tariff was applied to all U.S. imports, with China facing an additional 34% levy (total potentially exceeding 60%), and China immediately retaliating with a matching 34% tariff on U.S. goods — confidence: high
- The S&P 500 fell 10% in two days; the Nasdaq and Russell 2000 entered bear market territory — confidence: high
- The Mexican Pete model portfolio was largely in cash with few open positions, limiting drawdown; two Australian gold miner positions remained profitable with stops raised — confidence: high
- JHX’s acquisition of AZEK is interpreted by price action as either overpaying at this stage of the cycle or insufficient earnings accretion — confidence: medium
- JHX has historically functioned as a leading indicator for the end of the real estate cycle — confidence: medium (author’s recurring claim; not independently verified here)
- RSM carries too much overhead supply for a clean Mex Pete breakout setup — confidence: medium
- Imdex (IMD) is setting up a Mex Pete pattern near prior all-time highs on the weekly chart — confidence: medium
- Copper is pulling back after nearing prior record highs; a measured pullback could produce a cup-with-handle pattern — confidence: medium
Mex Pete References
- Core explanation: Readers directed to page 67 of WD Gann’s Truth of the Stock Tape to plot Mexican Petroleum (Mex Pete) dates and prices on graph paper. The resulting pattern features higher lows rejected from a common resistance (flat top), forming an ascending triangle that resolves in a breakout — used as the primary signal to enter trades.
- Keynes link: The Beauty Contest analogy is used to frame Mex Pete as a tool for reading collective market judgment — a series of higher lows shows buyers stepping in more quickly, signalling what “the judges” (the market) favour.
- IMD (Imdex): Explicitly flagged as setting up a Mex Pete pattern near prior all-time highs; weekly chart from 2010 provided. Added to the Australian Watchlist on this basis.
- RSM: Removed from the Australian Watchlist specifically because overhead supply would prevent the clean near-all-time-high breakout that Mex Pete patterns require.
- General portfolio context: Absence of Mex Pete setups across the broader watchlist prior to this email is cited as the direct reason the model portfolio was heavily in cash — framed as the pattern working as intended in a declining market.
Stock Picks / Signals
| Ticker | Exchange | Action | Detail |
|---|---|---|---|
| JHX | ASX / U.S. | Remove from watchlist | Breaking down following AZEK acquisition announcement; also serves as real estate cycle leading indicator |
| AZEK | U.S. | Remove from watchlist | Removed implicitly as part of JHX/AZEK situation |
| RSM | ASX | Remove from watchlist | Excessive overhead supply; no clean Mex Pete breakout path |
| IMD (Imdex) | ASX | Add to watchlist / Watch | Mex Pete pattern forming near prior all-time highs; weekly chart from 2010 cited |
| Copper (commodity) | — | Watch | Pulling back from near record highs; potential cup-with-handle setup forming |
| Australian gold miners (2 positions, unnamed) | ASX | Hold / Stops raised | Profitable positions retained; stop losses moved up to protect gains |
Predictions / Forecasts
- Copper: If current pullback is shallow enough, a cup-with-handle pattern may complete and offer a long setup — no specific price target or date given.
- Implicit cycle view: JHX breakdown signals proximity to the end of the real estate cycle (consistent with Anderson’s 18-year cycle framework), though no explicit cycle turn date is stated in this email.
Notable Quotes
“Rather than selecting based on personal taste, contestants must anticipate what others will find appealing, creating a game of second-guessing and collective psychology.” — Used to frame why Mex Pete (reading collective buying behaviour via higher lows) outperforms fundamental analysis in speculative markets.
“A series of higher lows shows buyers stepping in more quickly. The judges are telling you what they like. From there, a breakout is the signal to get in.” — Concise statement of the Mex Pete entry logic.