A Rare Buy Signal in a Surprising Sector

[TradeSmith Daily]( A Rare Buy Signal in a Surprising Sector Consider this: On a dark night, our naked eye can spot up to 3,000 stars. Grab a pair of binoculars, you’ll find 100,000. Use a telescope and you’ll see 50 million! Stargazing is much better with the proper tools and gear. The same goes for the stock market. Focusing on basic indices that you hear about in the mainstream media, or track on CNBC, reveals a small sliver of what’s really happening. Diving deeper uncovers rare bullish setups hiding in plain sight. That’s exactly what’s going on in the Utilities sector right now. Many investors consider utilities a boring investment. But this signal has a forward profile that’s going to surprise you. We’ll get into the PROOF as we usually do, but first, let’s see where Utilities stocks stack up versus the market. They’re experiencing extreme underperformance in 2023. RECOMMENDED LINK [R.I.P. for the American Dream? (Surprising answer inside...)]( A record-low happiness level is seeping through the nation’s fabric like wildfire. The culprits? The floundering state of the economy... rising housing costs... and skyrocketing inflation. It’s called the “opportunity gap”... And the bad news is it’s only getting wider. BUT THERE IS HOPE... Meet Andy and Landon Swan, a couple of Midwestern brothers who transformed themselves into legendary Wall Street fintech experts. Fortune 500 companies and $100 billion hedge funds pay up to $750,000 a year to access their stock market research. Now they’ve issued a major buy alert for a surprising company making news in the AI space. They have compelling evidence that this [Great $2 AI Moonshot]( could become the #1 tech sensation of the decade! [Go here now for the details]( The Utilities Select Sector SPDR Fund (XLU) is down 8.46% YTD. That trails the S&P 500 by over 25%! FactSet Looking at price alone won’t reveal a bullish opportunity. Focusing on big, unusual trading activity does. After spending years on Wall Street, I’ve learned to respect volume behavior that’s out of the ordinary. A great way to visualize what I mean is with the following unique data set. Below plots the daily buy and sell counts of institutionally tradable Utilities stocks. This chart isn’t looking at order flow, rather it’s tallying the number of stocks gaining or falling alongside outsized volumes. These data points are indicative of institutional footprints. Keep in mind, each individual stock trades with its own behavior. So, this signal captures unusual trading activity. Notice how September 5 had a huge red bar, highlighting 26 Utilities stocks were sold: That amount of red is eye-catching, as it should be. Whenever 26 discrete equities, from a universe of 49, get sold — it’s super rare. It’s indicating forced selling is taking place. That’s when large institutions are likely reducing their risk across the board. Going back to mid-2020, just three years ago, reveals a total of five instances with similar outflows: This level of selling is extremely rare. More importantly, notice how those red bars don’t hang around long. When stocks see capitulation like this, value hunters swoop in and buy the fire sale. This is the epitome of the Wall Street adage of buy low, sell high. Historically, these lows offer a compelling buying opportunity. Don’t take my word for it, though. Let’s prove it! I’ve isolated similar sell points going back to 2013. For this study, I’m looking at days where 20 or more Utility stocks were sold. Prior to September 5, it’s only happened 33 times… roughly three times a year. Incredibly, 1-week to 1-year averages stunningly positive returns: One month after these outflows, XLU ramps 5.3%. Six months later, XLU gains 10.1%. Wait a year and returns are nearly +20%! That’s the opposite of boring. RECOMMENDED LINK [16,000 Financial Advisors Will Use A.I. for Stock Picking, But You Don’t Have to Wait]( According to The Ascent, in a survey of American adults, 54% of respondents had asked ChatGPT for financial advice. Traditional financial service companies like Morgan Stanley are already developing A.I. bots for over 16,000 of its advisors that will give instant answers – and their clients a leg up on everyone else. But the thing is... you don’t have to wait for more developments in A.I. for the chance to start making money. We’ve been at the forefront of A.I. stock investing, and we want to show you something so you aren’t left in the dark anymore... [Check out this breakthrough A.I. forecasting system that can predict stock prices with remarkable accuracy](. To drive this point home one more time, the following chart lists the forward returns of XLU following big outflow days compared to all average returns for the ETF. In orange reveals what you can expect to gain from XLU via each time period since 2013. Compare that to the blue signals when rare selling takes place. It’s not even the same sport: MAPsignals.com This reveals the importance of using software to enhance your investing. [Having data-based tools in your arsenal will keep you ahead of the game.]( Based on this analysis, Utilities stocks are set for a monster run. Telescopes bring the stars to light. Data illuminates the markets. That’s what TradeSmith is all about. If you’re looking for explosive stock picks, utilizing a data-enhanced edge, sign up for [Quantum Edge Pro](. Jason Bodner uses a data-dependent, evidence-based approach to find market beating stocks. [He just released one of his favorite under-the-radar AI picks just last week]( (friendly reminder that subscribers must be logged in to access). [Click here to subscribe.]( Have a great day, Lucas Downey Contributing Editor, TradeSmith Get Instant Access Click to read these free reports and automatically sign up for research throughout the week. [25 Doomed Blue Chip Stocks]( [3 Stocks That Could Triple This Year]( [Download now on the Apple Store]( [Get It On Google Play]( [Customer Support: 866.385.2076](tel:+866-385-2076) | support@tradesmith.com [Request Customer Service](mailto:support@tradesmith.com) ©TradeSmith, LLC. All Rights Reserved. You may not reproduce, modify, copy, sell, publish, distribute, display or otherwise use any portion of the content without the prior written consent of TradeSmith. TradeSmith is not registered as an investment adviser and operates under the publishers’ exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmith’s content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results. TradeSmith P.O. Box 340087 Tampa, FL 33694 [Terms of Use]( [Privacy Policy]( To unsubscribe or change your email preferences, please [click here](. [tradesmith logo]