Folks,

Market Observations for the Week: Our belief is that the stock market indices are making a rounded top in Q1 of 2026 and we are turning defensive this week because of the approaching high-energy turn window on 2/28-3/02 which has the potential to provide an important turn for many markets.  For the stock indices, the setup we are looking for is a new, divergent ATH in the NYSE Composite, IWM or DJIA going into Monday, 3/2 followed by a sharp reversal down after the 3/3 Full Moon/lunar eclipse. If this setup triggers, we could see a quick retracement down to SPX 6600 into early March. It is possible that we could be seeing a 17-year bull market top from 3/6/09. The leadership of the SPX has shifted from the XLF(financials) which topped in January to the XLE(energy stocks) which are both late-cycle sectors in a topping bull market.  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 navigates the 3/3 Full Moon/lunar eclipse. Geo-political fears of another US strike on Iran over the “nuclear deal” will keep the market on edge this week. 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 early next week. 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 and the 3/3 Full Moon/lunar eclipse.