I’m not one for proclamations – guess I shouldn’t run for mayor – but I think it’s safe to proclaim that stocks have turned.
It’s also clear based on my data and qualitative analysis that we should have a nice rally ahead of us to achieve some juicy profits.
I mean, just look at the surge in the Nasdaq. Tech has led the charge, and the tech-heavy index is already back to within 2.5% of its July highs.
It took nearly three months for the index to lose 12%. And it’s taken three weeks to gain 12%.
Unfortunately, many of those who sold on the way down probably haven’t gotten back into stocks – or at least not as fully invested as they were before.
Regular Power Trends readers know that I was exceedingly confident that a rally was coming. What I couldn’t pinpoint – and nobody can – was exactly when it would start and how quickly it would unfold.
That’s why, if you invest in the highest-quality stocks to begin with, it’s almost always better to stay the course. When elite stocks get hit with everything else, they usually then bounce the furthest and the fastest.
But you need to be in them to profit from the bounce.
That said, this strength should last a while, so it’s not too late to start making money.
A Swift and Sharp Turn
By any measure, the recent rally is about as impressive as it gets.
Sticking with the Nasdaq, we see that 13 of 15 trading days since the Oct. 26 bottom have been up. That’s a lot of green bars – and an 86.7% winning percentage.
What’s more, we also see that gap up on Tuesday after the latest inflation data was better than expected. A big move like that after the Nasdaq had already moved higher 10 of 12 previous days shows that investors are itching to buy.
This is confirmed by the data in my Quantum Edge system, where I track Big Money activity.
You can see on the chart below that Tuesday’s big up day generated the most Big Money buy signals (green bars) since July, when the market was strong. And below that, you can see how the number of buy signals has trended higher since the October bottom while the number of sell signals (red bars) has dried up dramatically.
A lot of stocks have been on fire. Roku (ROKU), the streaming device company, soared 43% in the past month. Netflix (NFLX) is up there, too, with a 35% pop.
In my two Quantum Edge services, 14 of 26 stocks in the two portfolios have rallied more than 10% just in November. Eight of those have surged more than 15%.
I hope you’ve enjoyed similar bounces in your stocks.
These Stocks Lead the Way
Our biggest gainer is a semiconductor company that has shot up 33% since the Oct. 26 bottom.
Technology led the last rally. And so far, technology is leading this rally – after a few bumps and bruises in between.
Expect that to continue. First of all, it just makes sense. We live in a tech-driven world.
And secondly – those of you who know me well won’t be surprised to read this – the data supports it. My research firm, MAPsignals, did an awesome study looking into the top-performing sectors after our proprietary Big Money Index (BMI) climbs out of oversold, which it officially did on Nov 6. Technology is the leader by far, averaging 27% gains in the year that follows.
What else do you notice in that table? Every single sector was up 12 months after the BMI was oversold.
Here again, that pattern is confirmed by current data. Tech is indeed leading us out of the depths. Since Nov. 1, more than 30% of all Big Money buy signals in my Quantum Edge system have been in technology – nearly twice as much as the next leading sector, Financials, with 17%.
Not surprisingly, this new buying catapulted Technology back to the top of my system’s sector rankings.
I wouldn’t be surprised to see stocks take a breather and even pull back a little bit after this latest run, but that would only lay the foundation for the next big move that I think could last through the end of the year and into the first quarter – possibly even longer than that.
You still have time to make money. And if you’re wondering where to start, high-quality tech stocks are the place to look. Just make sure they have the Quantum Edge trifecta of superior fundamentals, strong technicals, and Big Money flowing in.
Then enjoy the ride.
Editor, Jason Bodner’s Power Trends