Forced ETF Liquidations are Over
We’ve been front and center during the latest equity wipeout.
As headlines churn from tariffs to recession worries, our stance has been to buy into the meltdown.
The evidence points to the worst being behind us.
Forced ETF liquidations are over.
One tenet of great investing is to take the other side of the crowd. Warren Buffett said it best, “Beware the investment activity that produces applause; the great moves are usually greeted by yawns.”
He’s right. Often the unpopular stance is the great move.
The last few weeks brought extreme bearish money flows…staying constructive has been a lonely venture.
Today we’ll go over the evidence suggesting higher equity prices are coming sooner than the crowd realizes.
If you wait for the media to give you the green light, you’ll miss the big opportunity.
Violent Outflows Have Stopped
Two weeks ago, we were in the midst of heightened fear.
Back then we wrote how fear pays the bills on Wall Street. When the crowd dumps stocks, market makers make their year.
Then last week, we pointed to the Big Money Index potentially reaching oversold conditions.
As of late last week, our data has signaled a significant slowdown in risk-off action. You can see that with the BMI turning higher.
While it’s too early to know for sure if this latest up move will stick, the last few instances when a near-term low triggered, the BMI meaningfully climbed higher:
The only way for this North Star indicator to turn up is when capitulation stops.
Looking at the daily inflow and outflow action in equities (what determines the movement of the BMI), notice how forced selling vanished.
I’ve circled prior similar periods:
That latest big red bar was a nasty liquidation event.
As you can imagine, we were out in front to our PRO subscribers offering insight studies on why you want to be buying into these meltdowns.
Some of the best stock picking arrives when the crowd is fearful.
The great news is we can also glean insights from one of the fastest growth areas of the market: ETFs.
We recently witnessed incredible outflows.
Forced ETF Liquidations are Over
Being a former ETF institutional trader, I saw firsthand how impactful ETF liquidations can be.
Institutions will turn to these equity baskets for near-instant liquidity when times get rocky.
Similar to the equity wipeout showcased above, our ETF inflow and outflow chart shows similar footprints.
As you can see, forced ETF liquidations are over as highlighted by a complete vanishing of red signals:
And before I blow the doors off with a powerful signal study, let’s look at what a liquidation looks like from the MAPsignals lens.
The latest deep red bar, above, occurred on March 10, 2025. On that day, 6 funds were bought and 107 were sold.
Here’s the breakdown by asset class:
- 6 equity inflows were actually bearish wagers on inverse equity ETFs
- 89 equity outflows were spotted with 83 funds in North America
In summary, correlation went to one as there was no place to hide:
But as they say, that was then…this is now.
Forced ETF liquidations are over…for now. The last handful of days revealed signs of life. Yes, money is being put to work.
On March 19th, 2025, a total of 17 equity funds were accumulated…more importantly zero equity ETFs were sold:
Now what can we learn from this information?
Well, we can use our eyeballs and see a pretty clear relationship between extreme ETF capitulation and higher stock prices coming soon after.
But we can’t rely on our eyes for a signal. We need to actually test it.
On March 10th, 107 ETFs were liquidated. That’s quite rare. In fact, back to 2014 we’ve only had 54 discrete days when 100 or more ETFs were sold.
The great news is that small, mid, and large-cap indices surge in the months following with:
- 8%+ gains 3-months later
- Double digit gains 6-months later
- And market-beating 20%+ rallies 12-months later
When it comes to investing, the pendulum violently swings from pain to gain.
Forced ETF liquidations are one of the best reversion signals you’ll find.
If you’re not looking for oversold opportunities right now, respectfully you’re going to miss out on huge gains once the crowd jumps back in.
Here’s your opportunity:
In it we list 18 oversold all-star opportunities.
If you’re a professional or serious investor, get started with a PRO subscription as these liquidations don’t often come along.
Don’t wait for the applause to start buying stocks.
Take the other side of the crowd with evidence on your side.
***Lastly, join co-founder Jason Bodner as he presents: Find Market-Beating Stocks and ETFs in 2025: 1-Click Quant Analysis at the 2025 MoneyShow Masters Symposium in Miami.
Happening May 15th–17th, at the Hyatt Regency Miami. He’ll discuss our proprietary 1-Click Quant Analysis method of picking market-beating stocks and ETFs.
Click the image below to register. You don’t want to miss this!
