Summary
Phil Anderson identifies a major divergence opening in U.S. equity markets: AI-heavy mega-cap stocks and the major indexes are struggling near recent highs, while cyclical sectors — transports, small-caps, banks, industrials, and energy — are breaking out to relative strength. He contextualises this within the real estate cycle, drawing a parallel to 2007–2008 when late-cycle sectors continued rallying after the S&P 500 had already peaked. The email also delivers several model portfolio updates, including new positions in KBE and UMBF.
Key Claims
- The top 10 S&P 500 holdings constitute ~41% of the index, near an all-time record concentration — confidence: high
- Palantir (PLTR) fell as much as 37% from its early November 2025 high, with its top and subsequent support both occurring at seasonal midpoints — confidence: high
- iShares US Transportation ETF (IYT) made a decisive break above its 2024 high at the start of 2026, showing relative strength versus AI stocks and broad indexes — confidence: high
- Small-caps, banks, industrials, and energy are all displaying similar breakout price action in early 2026 — confidence: high
- In the prior cycle, Transports and energy stocks continued rallying until mid-2008, well after the S&P 500 peaked in October 2007; Anderson implies a comparable dynamic may be unfolding now — confidence: medium
- Gann’s principle that stock prices discount future business conditions is invoked to explain cyclical sector strength late in the real estate cycle — confidence: medium
- Counting 30 weeks (210 days / 7 months) and 60 weeks forward from the prior week’s volatility gives key dates to watch for renewed volatility in gold, silver, and copper — confidence: medium
- Seasonal midpoint dates are effective placement points for time-based stop losses — confidence: high
Mex Pete References
- KBE (SPDR S&P Bank ETF): Described as moving out of a Mexican Pete pattern; setup was first detailed in 35 – 27 January 2026.
- GOAT (VanEck Morningstar International Wide Moat ETF): Removed from the Australian watchlist because the most recent pullback is larger than ideal and is invalidating its Mexican Pete setup.
Stock Picks / Signals
| Ticker | Action | Stop Loss | Notes |
|---|---|---|---|
| VAU (Vault Minerals) | Closed / stop triggered | — | Stop loss slightly undercut; position exited, profits taken |
| XOM (Exxon Mobil) | Stop raised | $130 | Existing long position |
| RIO (Rio Tinto) | Stop raised | $148 | Stop set at the low of the February seasonal midpoint date |
| KBE (SPDR S&P Bank ETF) | New position added | $60 | Breaking out of Mexican Pete pattern; U.S. watchlist |
| UMBF (UMB Financial Corp) | New position added | $121 | Regional bank; breaking out after double-test of $125 resistance and accumulation pattern; stop at most recent higher low before breakout |
| GOAT (VanEck Morningstar International Wide Moat ETF) | Removed from watchlist | — | Mexican Pete setup invalidated by oversized pullback |
Predictions / Forecasts
- Late-cycle sectors (transports, energy, banks, industrials) may continue rallying even after a broader market peak is established, consistent with 2007–2008 precedent.
- Key volatility windows to watch for gold, silver, and copper: 30 weeks (~210 days / 7 months) and 60 weeks forward from the week of ~2 February 2026, placing those windows approximately around early September 2026 and early April 2027 respectively.
- A peak in the real estate cycle remains the overarching watch condition; no specific date stated in this email.
Notable Quotes
“Late-cycle sectors will often continue rallying after the market has made its peak. That will be something to keep a close eye on with these breakouts.”
“W.D. Gann was a genius. There’s no doubt about it. He (re)discovered the time axis of every chart. All based on ancient wisdom… All markets have ‘seasons’.”