CAPITAL SEASONS
Weekly Market Commentary
Week ending 5 July 2026 In the tradition of Dr Bart DiLiddo
| SEASON Spring | MPI 1.37 (↑ from 1.27) | VIX 15.81 (4W MA 17.17) | POSTURE Holding, not yet confirmed |
Season stayed Spring this week. MPI moved back up to 1.37 from 1.27 — the second read in three weeks, not yet a clean confirmation. Here’s what’s actually driving that number, one real portfolio decision from the Gardener, and an honest update on the Contrarian Portfolio, including the part that didn’t go cleanly.
What moved the MPI
Both the S&P 500 and Nasdaq closed the week above their 50-day averages — S&P +1.0%, Nasdaq +0.5% — and VIX dropped back under 18, which is what pulled the Fear component up a notch. Breadth held steady at 1.5 (Bull-Bear Spread +5.2% across the full 3,469-name coverage universe, excluding micro-caps). Momentum stayed soft at 1.1 — sector 1-month returns averaged just +1.5%, and that average is hiding a real split.
| Leadership | Health Care +11.8% (1M), Financials +8.1% |
| Laggards | Technology -8.9%, Energy -8.2% |
| Cap-tier gradient | Mega +16.2% → Large +8.7% → Mid +6.2% → Small +0.3% |
That last line is the one I’m actually watching. A steep drop-off from mega-cap to small-cap sentiment is the same pattern that’s preceded broader rollovers by four to eight weeks in this data before. Small Cap Strong-Sell% sits at 8.5% — not yet over the 10% line that would make me call it a real warning, but it’s drifting the wrong way. Not a reason to act. A reason to watch.
The wider picture
Oil has settled to $68–69 as US-Iran talks progress — a genuine de-escalation, not a blip. US jobless claims held at 215K (4-week average 222K) — a labour market that’s neither firing people nor hiring fast, the same low-turnover picture that’s held for weeks. FactSet’s Q2 earnings estimate has been revised up to 23.3% growth, from 18.8% at the start of the quarter — that’s the earnings force, DiLiddo’s first of the three, genuinely strengthening under this rally, not just sentiment running ahead of it.
SARB held at 7.00% (prime 10.50%) since May’s hike, next decision 23 July. The rand is up 8.3% year-on-year against the dollar — worth being precise about what that means: it’s a headwind, not a tailwind, for the rand value of any USD-denominated holdings. A stronger rand helps imported goods and local inflation. It does not help your offshore return.
The Gardener — one real decision
Most weeks the portfolio review is trims and watches. This week produced an actual weed, and it’s worth showing the reasoning rather than just the outcome.
Kinross Gold (KGC) has been a core Winter-protection holding for months. Gold miners in this system are exempt from momentum-based trim triggers — the sector trades on a different cycle, and a rough month for the gold price shouldn’t force a sale. But that exemption covers momentum, not the underlying quality floor. This week KGC’s Quant Rating fell to 2.77 — through the 3.0 hard floor that applies regardless of sector. That’s not the gold thesis having a bad week. That’s the quality case itself breaking. It’s out.
The distinction matters more than the trade itself: knowing which rule actually applies is what keeps a defensive exemption from quietly becoming an excuse to hold something that’s stopped being good.
The Contrarian Portfolio — live, including the part that didn’t go cleanly
Four weeks ago I opened a small, separate book — $29,000 starting capital, positions sized around $2,000 each, up to 15 names — built specifically to test one idea: buy where Seeking Alpha’s Quant model is already Strong Buy but Wall Street analysts are still cautious (rating ≤3.5, genuinely bottom-quartile by their own standard). The whole premise is that the algorithm sometimes sees what the Street hasn’t priced in yet.
This week’s four entries: NWPX (infrastructure), KMT (industrial machinery), WLFC (aircraft leasing), SYNA (semiconductors) — all screened Quant ≥4.5 against cautious Wall Street ratings. Here’s the honest part: by the time NWPX actually filled, its Quant had already dropped from 4.93 to 3.48 — through my own exit floor, on day one. Markets move between the screen and the trade. I chose to hold rather than reverse a same-day fill, flagged it for this week’s review, and I’ll say plainly next week whether that was patience or a mistake.
That’s the deal with running this in public: you get the clean wins and the untidy ones, in the same place, at the same time they actually happened.
What this means for positioning
- Spring is holding, not confirmed — treat new commitments as measured, not aggressive, until we see a third clean week.
- If you hold USD assets, the rand’s year-on-year strength is a drag on offshore returns right now, not a bonus.
- Watch small-cap breadth over the next few weeks — it’s early, but it’s the indicator that’s moved first before.
- Gold and defensive sleeves still deserve a place — but exemptions protect against sector-specific noise, not against a genuine quality breakdown.
Capital Seasons Weather Map
This week’s Weather Map registers Spring, holding conditions, constructive-but-watchful posture. Trend intact on both major indices. Participation is narrowing at the edges — small caps lagging mega caps by a wide margin — even as headline breadth stays healthy. Volatility easing (VIX back under 18) supports the season call. Liquidity backdrop stable. Discipline note: a holding season is not a green light to chase — it’s permission to stay invested while watching the edges.
Capital Seasons | Invest with the seasons. Not the noise.
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Capital Seasons is an educational platform. Content does not constitute personal financial advice or a solicitation to buy or sell any security. Always consult a licensed financial advisor before making investment decisions.
The rule that saved me from myself this week