True to form, September was the worst month for stocks so far this year.
Your gut may be telling you to jump off the rollercoaster, but you have to resist that urge.
I don’t say that because I want it to be true … I say that because the data tells us that’s the right move.
After the worst month of the year, some of the elite stocks in the market – the ones with the highest probability of making you good money – can now be bought at their lowest prices in months.
Think of it as the market joining retailers in offering juicy Black Friday discounts long before Black Friday is actually here.
I shared some of the compelling data about why it’s so important to buy now in the last Power Trends, which you can read here. Almost everything points to a highly profitable fourth quarter for investors in the right stocks.
Today, let’s talk about what to buy.
The easiest and best answer: Buy what Big Money is buying.
Big Money moves stocks. Period.
Institutional volume accounts for between 70% and 90% of daily trading. That’s billions of dollars every single day. Why swim against that financial current? Instead, you can ride that wave of Big Money!
In the big picture, Big Money has joined the selling these last two months. As part of my M.A.P. stock-picking system we use in Quantum Edge, I created a proprietary Big Money Index (BMI) that tells us in one number what Big Money is doing.
Through my past experience on a trade desk matching up institutional buyers and sellers, I learned the fingerprints Big Money leaves behind in its massive trading – despite institutions and hedge funds doing their best to keep their activity as quiet as possible.
The BMI today stands at 35.7. Simply put, that means 35.7% of the Big Money signals my system detects are buys at the moment. We can easily figure out that the other 64.3% are sells.
Big Money is in sync with the historical patterns of the market.
But… there is one area in particular where Big Money buying far exceeds selling.
It’s the strongest-ranked sector in my system, and that’s where we are going to find great opportunities for the coming fourth-quarter surge.
In fact, I’ll tell you about three of them.
The Clear Big Money Favorite Right Now
You might think Big Money would be buying up tech stocks. After all, you have monster winners already in tech giants like Nvidia (NVDA, +244% this year) and Meta Platforms (META, +116%).
And you would be right when analyzing the first three quarters of the year. Technology does rate the highest with a Quantum Score of 62.2. The Quantum Score is the overall grade my system assigns to stocks, sectors, and ETFs. It measures more than 30 fundamental and technical factors, of which Big Money is a part, to assign these grades.
But since July 27, Energy has been the strongest sector.
We see this everywhere in my system.
First, check out the Big Money signals over the last three months. Those green bars are unusually heavy buying days, and the red bars are unusually heavy selling days. You see tons of green and very little red.
Most sectors show the opposite pattern – much more red than green these last couple of months.
Going back to July 27 when Energy moved into the top spot, 22% of all Big Money buy signals were in that sector. That’s way ahead of Technology and Financials with 14% each.
You can also see the Energy Select Sector SPDR Fund (XLE), the shaded blue area, which has jumped nearly 15% when the S&P 500 is down a little more than 1%.
As Big Money flows into energy stocks, related exchange-traded funds have bumped up to the top of my ETF rankings. In fact, eight of my top 10 are energy ETFs. That’s a lot of strength in one sector.
The highest-rated energy ETF in my system is Invesco Energy Exploration & Production (PXE). It has rallied more than 20% in an otherwise tough quarter for most other stocks.
Two Top-Rated Energy Stocks
To help you out in this important time, I want to do something I’m not always able to do – share some of the highest-ranked energy stocks in my M.A.P. system:
California Resources (CRC): A spinoff off Occidental Petroleum (OXY)in 2014, CRC explores for and produces oil, natural gas, and natural gas liquids. It emphasizes production while also producing low caron and minimizing the footprint of oil and gas development.
The stock’s Quantum Score is powerful at 81. The fundamentals rank slightly lower at 79.2, but that’s still excellent. The technicals are equally strong at 82.4.
The main drawback is that we haven’t seen a Big Money buy signals since June, which is a little odd in a time when we are seeing them in other energy stocks.
Warrior Met Coal (HCC): Another smaller company,this coal producer and exporter also posts a Quantum Score of 81. The technicals lead the way with an 88.2 rating, powered by the stock’s 35% run over the last three months.
A big chunk of that came just this week as shares popped 10% the last three trading days as coal prices increased. And my system picked up two unusual buy signals.
The fundamentals don’t rate quite as well at 70.8. That’s not a bad score, but I am a little concerned that both earnings and sales are expected to fall this year. That often signals an inability to sustain price momentum, so HCC is kicking out mixed data points.
That’s why it’s important to look into all areas of a business to determine the best, highest-quality opportunities in the market – stocks that are the most likely to make you money. And those are the stocks of the strongest businesses (fundamentals) with share prices on the move (technicals) and Big Money flowing in.
These are both great stocks, but neither is my favorite right now…
My favorite energy stock right now is a pick in my Quantum Edge Pro portfolio. It scores even higher on all the metrics that matter.
It’s a smaller oil and gas exploration company that’s not a household name, but it is tops in my system with a Quantum Score of 86.2. And my system picked up two Big Money buy signals just in September.
We got in almost seven weeks ago and are up more than 6% when the S&P 500 is down 4%. It’s above my recommended buy limit at the moment but could easily dip back below in this choppy market.
And now is the time to buy these stocks. We may have a little bit more bumpiness ahead, but time is running out to snap up some of the best stocks in the market at bargain prices. I expect stocks to turn sooner than later, and these elite stocks – the top 1% in my system – will drive the market higher and make smart investors a lot of money.
Jason Bodner’s Power Trends
P.S. I recently recommended another highly rated stock, and it was also my answer to the question of where I would invest a million dollars right now.
It’s a small tech stock that meets all of our criteria… and it’s my favorite play on the massive AI boom that has already created $5 trillion in new wealth.
I put all of the details in a new report called M.A.P.’s #1 Move for the $5 Trillion A.I. Reckoning.Click here to learn how you can access it today – along with all of recent recommendations – and get yourself ready for a fun and profitable fourth quarter.