To view this email as a web page, go [here.]( [Power Trends] The Fear Is Real â Itâs Also an Opportunity
Some people think investment pros donât âfeel itâ in bad markets. That weâre either used to it or just donât care. Well, I am used to it â at least as used to it as you can get. I definitely care. And yes, I do feel it. Especially now, as the last couple of weeks have been pretty crappy for stocks. The S&P 500 even dipped into âcorrectionâ territory yesterday â meaning 10% below its recent closing high from July 31. That feels like a long time ago. Itâs uncomfortable seeing prices melt every day and nothing making sense. I feel myself getting anxious and a little worried. Itâs human nature. But I know from experience thatâs precisely the time to follow a game plan dictated by logic and informed by data. I built my [Quantum Edge system]( for that reason â to minimize emotional decisions, which almost never work out. When I started investing, I didnât think of my decisions as emotional. But they were. I chased stocks that ripped higher because I didnât want to miss out. I bought falling stocks because I had a âgut feelingâ they would turn around. I followed the herd into crowded trades that got overcrowded and fizzled out. It didnât end well. And I knew I had to find a better way. Fortunately, I did. And my data shows brighter days ahead with the odds overwhelmingly in our favor. Thatâs an opportunity you donât want to miss. A Perfect Record
Iâve told you before about my Big Money Index (BMI), which is one component of my Quantum Edge system. I designed algorithms that sniff out unusual buying and selling activity that isnât visible to most folks â something I learned running a trading desk that matched up institutional buyers and sellers. The BMI gives me a great snapshot of what the big money is doing. Institutions account for 70% to 90% of daily volume, so being able to see below the surface is a huge advantage. Right now â to absolutely no oneâs surprise â the Big Money Index is âoversold.â It ended the week at 18.2, which is well below the 25 threshold that marks oversold. It means that 18.2% of all the Big Money signals in my system are buys, so a whopping 81.8% are sells. Thatâs a rare and extreme level of selling that canât last much longer.
MAPsignals.com
When the BMI goes below 25, data shows that the S&P 500 has a nearly 80% chance of being higher six months later. But when the BMI dips below 20, those odds increase. So do the gains. I dug into the data and found that the BMI has fallen to 19 or below 18 times since 2016, and stocks were higher one, three, six, nine, and 12 months later every single time. And the S&P 500âs average returns are stunning:
- 1 month later: +12.1%
- 3 months later: +19.8%
- 6 months later: +28.0%
- 9 months later: +38.2%
- 12 months later: +47.6%
The takeaway: Donât sell quality stocks getting beaten with the overall market. They are likely to bounce⦠and soon. And, now is a time to buy great stocks on the cheap. RECOMMENDED LINK [How To Get In Early On a Stock Before a Tsunami of Cash Pours Into It](
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In addition to developing the Big Money Index, I also noticed that Big Money tends to flow in cycles. And we find encouraging news here as well. The phases are:
- Phase 1: Big buying, little selling. The rising tide lifts all boats.
- Phase 2: Buying slows, selling starts. The peak is nearby.
- Phase 3: Buying all but stops, selling grows. The pullback is here.
- Phase 4: No buying, lots of selling. The end is in sight.
Hereâs what the cycle looks like in a graphic put together by my research firm, MAPsignals:
My data indicates that we are in Phase 4. Buying has largely dried up while selling has exploded. There could be a few more speed bumps along the way â sometimes we need final a washout to exhaust the sellers â but we are nearing the onramp to the rally expressway. Data tells us we have much bigger upside potential ahead of us than downside. Hang on to great stocks you already own. Pounce on additional great stocks trading at bargain prices. Look for those with superior fundamentals, strong technicals â even if they have weakened in the volatility â and Big Money support. Thatâs what weâre doing in m [Quantum Edge services]( and my latest analysis shows weâre already in many of the best opportunities. The recent weakness presents fresh buying opportunities to get in ahead of the coming turn. Stay calm, use logic and data, and you will thrive. If we succumb to fear right now, history shows it will be an opportunity wasted. Talk soon, [Jason Bodner]Jason Bodner
Editor, Jason Bodnerâs Power Trends Get Instant Access
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