Folks,
Market Observations for the Week: Our belief is that the stock market indices are making a rounded-top top in Q1 of 2026 and we are turning defensive this week by raising more cash. Going into our 2/27-3/2 turn window, it is still possible for a new divergent ATH from the DJIA or IWM, but we are looking for a move down to SPX 6600 or so by early March. After getting a big win by being heavy XOM/CVX/SLB in Jan/Feb we are raising more cash and waiting to see how the SPX trades into early March. Geo-political fears of another US strike on Iran over the “nuclear deal” will keep the market on edge this week. In the bigger picture, the SPX may still be making a “rounding top” here with the late-cycle sector XLF topping on I/6/26 and the late-cycle sector XLE rotating into leadership on 2/4/26. Silver made a lower low early 2/17 at $71.82 and then reversed up impulsively – this could be the start of a B-Wave test of the 1/29 ATH at $121. The rotation of the XLE into a market leadership position favored our oil stocks: XOM/CVX/COP/SLB in February, but we are turning cautious here and expect a near-term correction. Sector selection will be key in 2026, and we do favor an important intermediate peak in the SPX in Q1 and that could happen close to the 2/28-3/02 planetary stellium. The XLE is in a seasonally strong period(Jan-Apr) and is favored in our work for 2026 – we also like the MOO ETF(agricultural). Our current investment positions were updated on the 2/20 close: 30% cash, 0% SLV, 0% DIA, 10% MOO, 25% GDXJ/SILJ/XLE, 15% XOM/CVX/SLB and 20% physical gold/silver/platinum. We have a 25% overall allocation to our short-term trading account which was last updated on 2/20 to include: 70% cash, 0% SLV, 10% CDE, 0% Barrick, 0% DIA, 20% XOM/CVX/SLB.
TURNING POINT DAY
Our turn window for this week is 2/28-3/02, the planetary stellium.