Reopening is underway across America. And while many people are worried about the uncertainties, the reality is showing a different story…
Just this past weekend, I took my family out for dinner. There was plenty to celebrate… The kids finally finished their last day of virtual school. And my oldest son received his first-degree black belt in taekwondo.
I expected to see others timidly taking steps back to normalcy.
Instead, the highways were packed with traffic… A lot of restaurants were booked solid… And people were seated much closer than the recommended 6 feet apart. (Most didn’t have masks on, either.)
So it’s clear that many are done with life in lockdown. They’re all for reopening. And I bet the process will happen much faster than expected.
This is likely the mindset driving the market’s rebound of over 37% since its March lows. It hasn’t made much sense compared to all the negative headlines.
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But we can see how pent-up local economic demand is now – which will likely translate to an uptick in national economic strength, too.
Don’t just take my word for it, though. Today, I’ll show you how the numbers are also signaling more market recovery ahead…
The Big Money Is Still Buying
Remember, the market is just numbers. That’s why I created my “unbeatable” stock-picking system. I wanted my investing decisions to be driven by data – not emotion.
So I used my experience from nearly two decades at prestigious Wall Street firms – regularly trading more than $1 billion worth of stock for major clients – to make sure it’s highly accurate, comprehensive, and effective.
My system scans nearly 5,500 stocks every day, using algorithms to rank each one for strength. But it doesn’t just look at individual stocks. It also tracks big-money buying and selling in the broad market through its Big-Money Index (BMI).
And here’s what its data is saying about the market right now…
Now, when the index level dips to 25% (the green line in the chart) or lower, sellers have taken the reins, leading the markets into oversold territory. And when it hits 80% (the red line) or more, it means buyers are in control and markets are overbought.
Currently, the BMI has surged to almost 93%. So we’re in extremely overbought conditions. But the buying shows no signs of easing up just yet…
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Just take a look at the table below. It shows the number of big-money buy and sell signals my system picked up in each of the main market sectors last week…
As you can see, big-money buying is in full force. There was only one sell signal across all sectors. Even lagging sectors like energy saw some institutional buyers pile in.
And it’s not just individual stocks. Exchange-traded funds (ETFs) are seeing massive buying again, too.
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My system picked up a total of 116 big-money signals in ETFs last week (a four-day trading week). Only 10 of those signals were sells. The remaining 106 were buys.
And to put that in perspective, consider this… The 10-year average of big-money signals in ETFs is 12.1 per day. Last week, we saw ETFs average 29 big-money signals per day. That’s more than double the 10-year average volume.
So what’s driving all this buying?
Sticking to Our Game Plan
Well, we know the market is forward-looking. Wall Street has been pricing in the effects of reopening and a coronavirus vaccine and treatment.
And now, Uncle Sam is stepping in as well. Last month, the Federal Reserve announced it would start buying ETFs tracking corporate bonds as part of additional market stimulus during the pandemic.
The bottom line is, the market is rocketing higher – even in the face of bad news.
Stocks and ETFs are seeing record big-money buy signals since the March bottom. And that means the current overbought market conditions could last for a while longer.
As I’ve told you, over the last 30 years, overbought periods last an average of a month… and can last as long as over three months.
So while a short-term pullback is on the horizon, we just need to follow our win-win game plan in the meantime.
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We still have time to ride this latest wave of buying higher until the market crests. And when it does, we’ll take profits, raise cash, and be ready to add more winners on sale.
All we have to do is stay calm, keep following the data, and start creating our new normal as America continues to reopen.
Patience and process!
Jason Bodner
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