Summary
Phil Anderson uses the November 2025 update to identify early warning signs that the current 18-year cycle peak may be approaching, pointing to lagging homebuilder stocks (ITB) and weakness in private equity giant Blackstone (BX) as key divergences from the broader S&P 500. He also highlights copper’s role as a late-cycle commodity and notes deteriorating market breadth as a reason for caution in adding new positions.
Key Claims
- Homebuilding stocks (ITB) have been lagging the broader market since peaking in October 2024, a potential early warning of cycle exhaustion — confidence: high
- Homebuilders led the market higher in 2023 (breaking to all-time highs before the S&P 500) and historically top out before the broader market; in the 2005–2007 cycle, homebuilders peaked two full years before the S&P 500 — confidence: high
- Blackstone (BX) formed a bearish double-top near $190 in September 2025 relative to its November 2024 high, and is diverging negatively from the S&P 500 — confidence: high
- BHP’s repeated pursuit of Anglo American signals intensifying competition for copper and other key commodities, consistent with late-cycle dynamics — confidence: high
- Copper prices tend to spike in the final years of the second half of the cycle due to construction boom-driven demand/supply imbalance — confidence: high (per Anderson’s own book, The Secret Life of Real Estate and Banking)
- The current copper demand driver is AI data center construction rather than traditional residential/commercial real estate — confidence: medium
- Only 29% of U.S. stocks were trading above their 50-day moving average at one point in the week prior, indicating significant breadth deterioration beneath the surface of a near-record S&P 500 — confidence: high
- Periods of weak breadth are not ideal for initiating new positions in Mexican Pete breakout setups — confidence: high
Mex Pete References
- LME Copper: A bullish Mexican Pete pattern has been developing since 2022, forming at prior record highs. Anderson flags this as confirming the second half of the cycle is unfolding as expected.
- Cheniere Energy (LNG): Being removed from the U.S. watchlist because the stock is weakening and “no longer has a valid Mexican Pete pattern.”
- General note: Mexican Pete breakouts typically occur with a stock trading above key moving averages (50-day and 200-day); current breadth conditions make new entries difficult.
Stock Picks / Signals
- ITB (iShares US Home Construction ETF): Watch level at $85; a break below would confirm a lower low and strengthen the downtrend. No buy signal — monitoring for cycle-peak warning.
- Blackstone (BX): Watch level at $120; a break below would represent a break of key support. No buy signal — monitoring as a cycle-peak indicator.
- Cheniere Energy (LNG): Removed from U.S. watchlist. No longer holds a valid Mexican Pete pattern.
- Imdex (IMD): Stop hit at point of entry (stop had been adjusted to breakeven last month). Position should be closed; no longer held in Mexican Pete portfolio.
- Vault Minerals (VAU): Recently completed a reverse stock split. Stop adjusted to split-adjusted level of $4.30. Ensure stops are updated.
Predictions / Forecasts
- Homebuilding stocks and private equity firm stock prices are expected to continue leading the broader market lower as the cycle peak approaches, consistent with the pattern seen in 2005–2007.
- A break of ITB below $85 would signal a confirmed downtrend (lower high + lower low structure).
- A break of BX below $120 would signal a break of key support.
- No specific date or index-level forecast for the cycle peak is given in this email.
Notable Quotes
“Recall that stock prices discount future business conditions, and that many homebuilding stocks put in their highs in 2005 during the last cycle. That was a full two years before the S&P 500 topped out.”
“I frequently refer to the second half of the cycle as the Winner’s Curse phase of the cycle… the successful bidder for an asset or business is purchasing at unsustainably high prices and expensive valuations.”