I’m a dog person, but I feel a little bit like a mouse right now.
That’s because of the old saying…
When the cat’s away, the mice will play.
Well, most of Wall Street is away right now. I talked to several of my friends who work on Wall Street last week, and not one of them was in the office.
When Big Money is on vacation, we get lower volume and higher volatility.
We’re also in August, which along with September are the two worst months of the year for stocks.
So why would I want to “play”?
Think of it more as a strategy game.
Now is the time to get in position for the fourth quarter, which is historically the best quarter by far. And there are other catalysts lining up this year that point to an unusually big finish to the year.
With Big Money traders tanning themselves at the shore, smart investors can swoop in to position themselves to make the most of what’s coming.
That’s what we’re doing right now in my investing services, and it’s a simple two-step strategy:
- Take some profits.
- Pounce on great stocks at lower prices when you get the chance.
Ka-Ching
Notice I said take some profits. I don’t mean sell everything. This is not about going to cash.
I would focus on your biggest gainers, whether you sell all or some of your shares, as well as stocks that may be lagging and whose potential is not what it was when you initially invested.
We put this strategy to work last week in my Quantum Edge Pro service when we sold five stocks. We still have 10 others, which we are keeping for now with my data indicating higher prices ahead.
The five stocks we sold included four big moneymakers and just one loser:
- Arch Capital Group (ACGL): 49.2% overall returns
- Axcelis Technologies (ACLS): 34.2%
- Federated Hermes (FHI): -14.1%
- Monster Beverage (MNST): 15.5%
- Vertex Pharmaceuticals (VRTX): 20.6%
This is exactly what we aim for and expect. The goal of my Quantum Edge system is to crank out a lot more winners than losers… and to have the winners be a lot bigger than the losers. Our winners averaged 30% gains, with our one loser down 14%.
You can’t help but succeed if you keep doing that.
It’s also in keeping with my system’s historical win rate. Through extensive back testing and years of “real world” use, I expect to make money about 70% of the time. In this case, 80% of the stocks we sold were in the green.
If you’re looking at a similarly successful portfolio, first of all, congratulations! And secondly, consider locking in some of those gains.
I want to be clear that we did not sell these stocks because they suddenly became bad investments. In fact, we may get back into some of them if they continue to rate exceptionally high – but pull back enough to give us some juicy bargains in the August and September volatility.
We sold simply because it’s smart portfolio management.
Selling these stocks…
- Reduced our overall risk in these historically volatile months, and
- Raised cash for us to put right back to work in the market’s best stocks that dip in the summer slowdown.
These are not bad summer strategies most years, but they are especially important this year because the fourth-quarter surge could be powerful and profitable.
Where to Find Those Golden Opportunities
As we go through the next couple of months, some of the best stocks in the market will fall to prices that are too good to pass up.
You want to start by identifying those elite stocks with the highest moneymaking potential.
These are the companies I’ve programmed my Quantum Edge system to help me find. These are the stocks with superior fundamentals, strong technicals, and Big Money flowing in.
These characteristics led us to the stocks we just made money on, and these are the characteristics that produce the high win rate that’s possible with a data-driven approach to investing.
I have a watch list I’m following closely for my Quantum Edge services. I update it every day, depending on how the ratings change and which stocks are getting closer to where we want to buy.
I can’t give you that information, but I can give you a sector to consider. And I think it will surprise you.
My system analyzes and ranks sectors the same way it does stocks. We can tell which sectors have the best fundamentals, technicals, and Big Money inflows.
As you would expect, tech has been the strongest sector for months. It continues to score well but now ranks third in my system. Discretionary stocks rank second, and the current leader is a bit of a surprise…
Energy has surged to dominate all other sectors thanks to oil prices popping from the $60s in June to the $80s today. Our system picked up the explosion of big buying in energy stocks in that time, which are the green bars on the chart below. It’s the most Big Money buying we’ve seen in energy since 2022… and with very little selling (the red bars).
Energy looks as if it may lead higher for a while, so you may want to do some digging there. I will be.
If you want to put our heads together, you can click here to learn more about Quantum Edge Pro and be notified right away when I make my next recommendation.
Now is the time to get ready for what’s to come, so we’ll continue to play while the Wall Street cats are away.
Talk soon,
Editor,
Jason Bodner’s Power Trends
