When a doctor reads an x-ray, that physician doesn’t really need to know why a bone is broken to know the right way to treat it.
It doesn’t really matter if the patient was trying to be Superman on his kids’ backyard trampoline or makes millions of dollars a year getting banged around as a professional athlete.
The what – that broken bone – is more important than the why.
Honestly, the absence of that “why” can be a tough hurdle for folks to clear. It’s human nature to want that whole story, to want “closure,” to want all the answers.
That’s true of the storylines we come across in books … in movies … in the “true crime” tales that have become so popular these days.
It’s also true of the stock market.
If the market falls, investors want to know why. If a stock rockets, investors want to know why.
In real life, you don’t always get all the answers. You don’t always get the full picture.
And if you wait to get it – if you let that lack of total clarity freeze you in place – the cost can be substantial.
In fact, I’m going to let you in on a little investing secret – one that can turn you from loser to winner, from laggard to leader.
It’s not always possible to see “The Why” right away. It’s great when you can. But you don’t always need that full picture to make money.
Our Quantum Edge stock-picking system is a lot like an x-ray. Thanks to its massive data retrieval and analysis, we can peer below the surface and see what is really going on.
And that “what” is Big Money, both buying and selling.
I’ve told you before about the trade that started it all for me. A friend of mine, on behalf of a client of his, was snatching up millions of shares in a stock – and that stock surged 70% in a month.
We didn’t know who this buyer was or why he or she was buying that stock. But we knew what was happening: Somebody was buying a lot of shares, and the stock was ripping higher as a result.
We eventually found out that this big buyer was a hedge fund. But by the time we did, the stock had already made its big move. Anyone who waited around until they knew the whole story – waited to know that “why” – missed out on a terrific opportunity.
I’m sharing this investment tip because there’s another opportunity right in front of us – one I don’t want you to miss.
The Big Money that moves stocks, sectors and even entire markets has been cascading into one specific sector.
But nobody’s talking about it.
It’s not making headlines.
You’re not hearing about it on CNBC.
And I think I can explain that failure.
You see, this sector is out of favor – hated, even – so even the few who are aware of this aren’t speaking of it.
Because they can’t explain it. They don’t know the “why” – and they’re waiting until they do.
I don’t need the “why.” I just need to know that it’s happening – so I can act – and make money.
Let’s talk about where the money is flowing and how to use that to your advantage.
And the Strongest Sector Is…
Thanks to computing power, artificial intelligence, and sophisticated algorithms, our computers run through thousands of stocks and ETFs every night, and our Quantum Edge system ranks them based on their fundamentals, technicals, and the Big Money pouring in.
And here’s another cool thing: Our system can do the same thing with entire sectors.
It assigns sectors an overall Quantum Score, as well as individual Fundamental and Technical scores.
Which sector do you think is the strongest right now?
I’ll give you a hint: It was one of the worst and most feared sectors in 2022.
It’s our old friend Technology.
I’m starting to see a smattering of headlines related to it. But the media hasn’t put the whole story together. And an awful lot of people still want nothing to do with tech stocks. They were burned in 2022. And they believe that – against a backdrop with slower growth and higher interest rates – tech remains vulnerable.
Big Money hasn’t seen it that way for months. And since Big Money is responsible for 70% to 90% of daily trading volume, I’d rather know where that money is going than what some talking head is saying.
In the eight trading sessions leading up to yesterday’s quarter-point bump by the Federal Reserve, Technology was the strongest sector every single day. It was also the strongest sector yesterday when the decision was announced and investors tried to figure out if they approved or disapproved.
And Big Money didn’t just wake up to tech. It has been the second-strongest sector in all of 2023, right on the heels of Discretionary stocks.
Let me give you an x-ray-like peek inside our system and show you exactly what I mean. The chart below illustrates unusually heavy buying (green bars) and selling (red bars). The lessons I learned managing Big Money trades helped me prioritize the data I pull and guided the algorithms I wrote to recognize these signals. The blue shaded area is the Technology Select Sector SPDR Fund (XLK).
What hits you when you look at that chart?
There are many more and much bigger green bars – buying bars – and XLK has shot higher.
Yes, selling increased recently, but that’s not surprising. Those red bars on the right side of the chart emerged in the initial stages of the bank scare when the S&P 500 slid 5% in a week and investors sold just about everything. I can tell you the selling didn’t come close to last spring or last fall, and as you can see on the chart, the heaviest selling subsided pretty quickly.
The established trend is conclusive: Big Money is investing in anticipation of higher stock prices in the market’s top growth sector.
We should do the same.
Tech Should Thrive Even More as Rate Hikes End
I don’t know if Big Money knows anything more than we do, but as I said, it doesn’t really matter.
What matters is where the Big Money is going.
Big Money has been investing for the end of rate increases for a long time now. If you look at the data, you can see inflation easing, and the Federal Reserve was starting to hint that the end was in sight.
Recent bank failures served as smoke detectors, warning the Fed of a few smoldering embers that could ignite into a bigger blaze if not addressed. The Fed, the Treasury Department, and other banks banded together to douse those still-glowing cinders.
One key strategy that’s a kind of financial flame retardant is a central-bank sentiment shift. The Fed, formerly hawkish and aggressively boosting rates to kill off inflation, is now winding down that rate campaign to ease the squeeze on banks. The Fed is right now forecasting just one more rate increase this year. And while investors hoped for an even-more “dovish” tone from Chair Jerome Powell, this is the firmest signal yet that the end is near.
That’s better for the economy, and it’s better for stocks.
Tech – and growth stocks in general – got hurt by rising interest rates. Rates are closer to stabilizing, and Big Money has been getting in position for this the whole first quarter.
The best opportunities are often the strongest stocks in the strongest sectors. Thanks to our computers doing the work of a whole office of analysts, our Quantum Edge system helps us find the strongest of both – every single day – through our proprietary analysis of fundamentals, technicals, and Big Money flows.
We know what’s happening and what stocks are primed to move higher. And isn’t that all that really matters?
Editor, Jason Bodner’s Power Trends
P.S. My first two stocks in my new Quantum Edge Trader service are exactly the kinds of stocks I’m talking about. Both rate high in my system and have Big Money flowing in.
Click here to learn more, including how you can join and receive immediate access to these two cream-of-the-crop stocks.