Pepto Bismol Week

Source: Michael Ballanger 10/26/2026

Michael Ballanger of GGM Advisory Inc. shares his thoughts on the current state of the market.

As the famous Yankee catcher Yogi Berra once said, “It’s déjà vu all over again.”

Thirty-nine years ago, I was a young securities salesman toiling in the London branch of the venerable old investment house, McLeod Young Weir Ltd. (that eventually merged in 1988 with the Bank of Nova Scotia to become ScotiaMcLeod). It was October 23, 1987, four days after the infamous “Crash of ’87,” that I sat at my desk after fielding more than two hundred calls from clients so completely distressed that by the time the bell rang at four o’clock, I gratefully instructed the receptionist to refrain from directing any more calls to my office.

As an advisor to people that start out as “cold prospects” later developing into “hot leads” and then finally coming “over the wall” to become full-fledged “customers”, only after years of service did I learn to ignore all of the insidious sales techniques designed to get all of their money under my control ranging from personal trading accounts to retirement funds and just to put the icing on the AUM cake, children’s educational and trust accounts. You were trained that the goal within the firm was “asset under management” (“AUM”), with their identification monikers usually being an account number. If questioned about any personal information (other than their account size), salesmen were rarely trained in the art of developing relationships in the period of 1979-1987. It was only after the October 19 “Crash of ’87” that the industry realized that they need a remake.

On the prior “Black Monday”, the S&P 500 plummeted 20.47% in a single trading session, closing at 224.84, down from its opening of 282.70. This remains the largest single-day percentage decline in the history of the index. The crash wiped out roughly $1.71 trillion in global wealth (“chump change” by 2026 standards), triggered by a combination of stretched valuations, macroeconomic worries over a falling US dollar, and early computerized algorithmic “program trading” that exacerbated panic selling.

I have written this before, so please forgive the redundancy, but I was buying put options on the OEX index (representing the S&P 100) every month since June of that year, and after running out of available funds by September, I made the fatal error of not replacing the OEX puts. By the time that fateful day came to an end, had I maintained my $5,000 position in at-the-money (ATM) October puts on the OEX right before the weekend of the 1987 crash, my position would have been worth an estimated $375,000 to over $625,000 by the end of Black Monday. Instead, a $300,000 portfolio was worth $18k after margin debt was eliminated.

One week ago, I lifted most but not all of my hedges on the basis of my conviction that the U.S. 10-year bond yield had peaked above 5.30% and that the U.S. dollar was due to correct from 102.56 to lower levels to work off overbought positions in both. However, despite being correct on the call on bonds and the dollar, the technology stocks that I had been serially short since June decided to crash, which they did before a late-week bounce allowed a very modest recovery. I also expected gold to move opposite bond yields and the dollar, which it steadfastly refused to do, losing another $117.00 per ounce, marking a 2.83% drop for the trading week ending October 23, 2026. It just proves once again that markets that operate on the thin edge of the leverage knife will act irrationally when the margin clerks all come a-calling.

The QQQ:US is now off 7.66% since its intraday peak two weeks ago, and if I were a gambling man (or shall I say “MORE of a gambling man”), I would say that the top is in for the technology sector.

One of my heroes from the 1980′s was legendary Crash-caller Martin Zweig, whom I met at the Wharton School in the men’s room after copious drinks, where we were both at the urinals doing our business. Since the accepted protocol in a Men’s Room demands that men keep their distance at the urinals for fear of being labelled a “peeker”, men always leave an open urinal between them and the next user. On this occasion, someone had left a NY Yankees cap in the urinal between us, conspicuously seated just above the drain.

Marty, who had obviously been imbibing at the head table along with Gail Dudack and some other Wall Street rockstars, zipped up and just before leaving, pointed to the hat in the vacant urinal and said: “They’re never getting that poor bastard outa there.”

From that point on, I paid very close attention to Mr. Zweig and never missed an episode where he was present. If you traded using only the mantra in the graphic shown above, you would be ahead money in every market cycle. When Kevin Warsh was appointed as the new Fed chairman and told us in his first FOMC presser no fewer than ten times that “We will get to 2% inflation,”, I had to laugh at the number of CNBC anchors, commentators, and guest analysts who shrugged him off, assuming that he would NEVER take away the Wall Street punch bowl. They all ignored what Marty told us decades ago — that you do not fight the Fed and you do not fight the tape.

However, Wall Street has been flipping the middle finger to both Zweig and Warsh since he was appointed last May, and while the new all-time high in the S&P 500 was only seventeen days ago, the damage has been severe in terms of both technicals and sentiment.

The bulls make a very strong case for a rally, and I have to respect that position because statistically, the safe bet is for higher stock prices by New Year’s Day, especially now that we appear to have at least survived the seasonally weak months of September and October. The problem I am having is that the last two weeks of October are typically the time that the “big money” starts bargain-hunting in anticipation of a year-end charge.

Based on that assumption, this week should have been an “UP” week, and up it was for literally 65-75% of the stocks in the S&P 500. The “unweighted” S&P 500 (SPXEW:US) was actually up while the regular S&P 500 (SPX:US) was down .89% or 68.61 points this week, all due to the unwind in overweight positions in technology and “AI“.

Early in the week, I could not get Yogi Berra out of my mind and in addition to the déjà vu quote, I was thinking of Yogi’s “You can observe a lot by just watching” when I decided that I could not look in the mirror for the rest of my actuarially-challenged years if I watched the technology bubble pop in front of me without having at least a perfunctory short position. On Monday and Tuesday into a rally in the QQQ:US, I went short technology despite looking to add to my gold and copper holdings. Despite taking it on the chin with the gold purchases, I ended the week sharply ahead on both the QQQ:US puts and the calls on Freeport-McMoRan Inc. (FCX:NYSE), my absolute favorite of all blue-chip stocks.

Earlier today, I sent out a note to all subscribers detailing the one thing that bothers me about turning bullish in here and, like the rest of the planet, betting on a post-election rally. You see, there is this Senate seat in Kansas currently held by incumbent Republican Senator Roger Marshall that is up for grabs in an unexpectedly tight race.

This is significant because Democrats have not won a U.S. Senate race in Kansas in 94 years (since 1932), marking the nation’s longest streak of one-party dominance for a Senate seat. Marshall cites voter dissatisfaction over high gasoline prices brought on by wars in the Middle East and Ukraine, which falls directly into the lap of Republican President Donald Trump. This is a deeply strong Republican stronghold under tremendous siege by the Democrat upstart.

If the Republicans are swept out of power next month, stocks are not going to rally. Commodities will rally, but the U.S. dollar and treasury bond yields will reflect gridlock, and that will be a disaster for technology that needs those “Big Beautiful Bill” tax cuts to remain in place, which they won’t.

And then there was gold … and gold miners. Ugh!

One would have thought that if you timed the pullback in the U.S. 10-year yield from 5.364% to the current 4.988% in less than 10 days, that the U.S. dollar index, which topped the same day at 102.735, would follow suit, which it did — sorta.

Most importantly, one would have thought that if one nailed the tops in both the U.S. 10-year yield and the U.S. dollar index, that an inverse tape reaction should have taken gold and silver prices into full-on “rally mode“. Wrong.

Well, one glance at the chart shown on the next page, which plots gold versus the 10-year yield, and one would expect that gold would behave in the past ten days exactly as it has since the start of 2026. Note how gold was $4,680 on August 24 with the U.S. 10-year yield at 4.60%.

As yields then proceeded to ramp up into spiking oil prices all through September and into the first week of October, gold prices moved in a diametrically opposite direction until October 7, when the 10-year yield peaked at 5.364% while gold matched that peak inversely with its own private nadir at $4,066. Since then, gold and the 10-year have moved in a lockstep decline.

As discussed earlier, gold is now being dumped as a source of liquidity for those portfolios that have been using it as a hedge against a tech stock drawdown. When the semiconductors went “no-bid” on Thursday morning after Meta Platforms Inc. (META:NASDAQ) revealed their CAPEX spending plans (along with a prospective share issuance), gold joined in the rout which, for gold afficionados like me, was actually a very good sign because when gold and gold miners get jettisoned because Joe Hedgefund got a massive margin call on his disgustingly-overweight position in Nvidia Corp. (NVDA:NASDAQ), that reeks of capitulation where babies get thrown out with bathwater and careers managing other people’s money come to a resounding end.

So, with this all in the rear-view mirror, let it be known that I added to my GLD:US long positions (in both shares and call options) and will be adding the VanEck Senior Gold Miners ETF (GDX:US) next week.

I find it fascinating that when you look at what is ailing the broader U.S. markets right now, one sees the breathtaking rate of descent in free cash flow and equally breathtaking ascent in debt for the hyperscalers that are saddled with the task of building out the datacentres that will supposedly bring China to its knees in the battle for global supremacy.

Contrast that with the gold, silver, and copper miners who are experiencing that exact opposite — breathtaking rates of ascent in free cash flow and equally breathtaking rates of descent in debt. In fact, the balance sheets for the major gold producers have never been stronger, despite Wall Street’s finger-wagging over the price of diesel fuel and how it will derail the miners.

Another reason that the sell-off in the metals made zero sense was the response of the markets to Thursday’s earnings report by Newmont Corp. (NEM:NYSE; NEM:ASX; NEM:PNGX), which looked like this:

“Driven by strong operational execution, higher gold sales volumes, and stronger realized copper prices, the company showcased exceptionally robust free cash flow and major capital returns.”

Key Financial Performance Metrics

Metric	Q3 2026 Result	Highlights & Context
Adjusted Net Income	$2.20 per diluted share	A third-quarter record for the company ($2.3 billion total).
Free Cash Flow	$1.9 billion	Generated from $2.8 billion of cash from operating activities.
Gold AISC	$1,454 per ounce	All-In Sustaining Costs on a by-product basis for the quarter.
Shareholder Returns	$1.9 billion	Combined total of dividend payouts and share repurchases.
Quarterly Dividend	$0.26 per share	Targets an annual framework of roughly $1.1 billion.

Major Strategic Takeaways

• Massive Share Buybacks: Newmont has aggressively repurchased $1.6 billion of common stock since its previous earnings call, including over $450 million in October 2026 alone. This brings their total share reduction to 10% since February 2024, amplifying per-share exposure to their free cash flow.
• Improved Full-Year Cost Outlook: The company improved its full-year guidance, now targeting full-year Gold AISC of ~$1,520 per ounce, marking a 10% optimization over their initial forecasts.
• Expansion Ahead of Schedule: The Tanami second expansion project is outperforming expectations, with commercial production now moved up to late Q2 2027.

There was nothing in the “forward guidance” that mentioned diesel or even expected cost increases, other than South American operations where severe weather has been an issue.

Yet, despite this superb, record-breaking performance, they sold it down 4.59%, which tells me that there is nothing in either current operations or forward guidance that makes NEM anything but a “pound-the-table-BUY”.

For those of you that are not subscribers, know this: I am not a “gold bug“.

I was a vocal advocate of selling the precious metals in August 2020 and a very annoying advocate of selling and shorting silver in late January of this year. When the precious metals get “goofy“, I sell them. I do not sell them all, but at the very least, I will reduce or buy a few puts for protection.

With corporate performances robust and balance sheets like the Fortress of Solitude, the gold miners should be bought with both hands and feet and tucked away for a stellar 2027.

Also to be considered is copper. After taking one long look at that chart, how can anyone be bearish on copper?

In my early morning GGMA Email Alert on Friday, I wrote the following, which bears repeating:

“I have studied copper’s demand-supply characteristics for over four years and am constantly trying to debunk the insanely bullish narrative that dominates both social media and the institutional trading desks. Unfortunately, whether I factor in a global economic expansion or global economic depression, inflation or deflation, or stagflationary recession, the dual impact of diminishing copper reserves and accelerating electrification and data-center demand continues to solidify the bullish copper narrative.

My favorite blue-chip stock — Freeport-McMoRan Inc. — has plunged from over $75 in late September to under $65 as of yesterday. I thought that replacing the shares and call options I sold in late August, around $80, was a smart move when it hit $68 a few days ago, and I was wrong. However, last night I went back and read some of my notes from a year ago when FCX plunged below $40, where I loaded the account with shares and calls, which gave me one of the best returns in all of 2025 and 2026. This company has never failed to reward me, so I am not waiting for the U.S. mid-term elections but instead will execute the following trade in the GGMA 2026 Trading.”

I added more Freeport-McMoRan Inc. shares and December calls on Friday because, at the end of the day, if I like gold, I have to love copper. My largest junior developer is a copper deal (Fitzroy Minerals Inc. (FTZ:TSX.V; FTZFF:OTCQX; C3Y:FSE)), so I am well-positioned to benefit when the tide stops going out and decides to flow back in.

I have two other stock recommendations that appear timely as we head into the final week of the volatile month of October, followed by the U.S. mid-term elections. Each of these two companies manufactures products that will be in accelerating demand by portfolio managers the world over if the Dems sweep the mid-terms and the sitting president is forced to play “prevent defense” for the next two years.

The first is the mighty Procter & Gamble Co. (PG:NYSE), first listed on the NYSE in the year 1890. This behemoth operates globally, serving approximately 5 billion consumers across more than 180 countries. In addition to consumer goods like beauty creams and shampoos, they are the prime manufacturer of Pepto Bismol, a medication taken orally for the treatment of nausea, heartburn, indigestion, upset stomach (often due to overindulgence in food or drink and especially relevant with the tech sector in freefall), and diarrhea (also helpful during market crashes).

The second company is Kimberly-Clark Corp. (KMB:NYSE), a mass Fortune 500 multinational that makes products for personal care, such as Kleenex, bathroom tissue, and paper towels. It is said that one-quarter of the world’s population uses a Kimberly-Clark product every single day. However, given the tremendous swings in stock prices, one of its products may experience a noticeable pickup in demand and that product is Depends, the adult incontinence product that many traders around the world may deem a necessity in coming months.

That wraps up the week ending October 23, after which Nomura’s cross-asset guru Charlie McElligott says “the bleeding has paused but not stopped,” summarizing the current market as “ a glass totally and completely empty.”

Nothing to see here…

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Important Disclosures:

1. As of the date of this article, officers, contractors, shareholders, and/or employees of Streetwise Reports LLC (including members of their household) own securities of Nvidia Corp. and Fitzroy Minerals Inc.
2. Michael Ballanger: I, or members of my immediate household or family, own securities of: GLD, Freeport-McMoran Inc., Newmont Corp., and Fitzroy Minerals Inc. My company has a financial relationship with: None. My company has purchased stocks mentioned in this article for my management clients: None. I determined which companies would be included in this article based on my research and understanding of the sector.
3. Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
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Michael Ballanger Disclosures

This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.

( Companies Mentioned: FCX:NYSE, )

Source: https://www.streetwisereports.com/article/2026/10/26/pepto-bismol-week.html