“They should just close the market for August and re-open in September” is what a multi-billion dollar fund manager said to me a few weeks back. It’s true, markets tend to catch a cold in August. Maybe we should all be zombie investors in August…more on that in a bit.
Since mid-July we said that August tends to bring sell-offs. Having a game plan is key. The selling this week is nothing new and was expected. That said, Monday’s selling was the biggest of the year. Last time we saw massive selling like this was the week of 5/28/19. That didn’t last long. A zombie investor does well in this environment- buy great stocks and die for a while. Being a zombie can crush the market’s return, especially going shopping in a falling market! (link to a full report below.)
Will prices go lower near-term? Most likely. But, that’s a good thing because it’s a buying opportunity for great stocks. On July 14th we started preparing:
“Don’t get alarmed but know this:
We are in a strong market, trading at highs with nearly all buy signals. That’s usually unsustainable, which means I think we are setting up for a little give-back. I don’t do predictions, but gun to my head- we could see -5.5% by mid-August; 2850 on the S&P 500. The data will give clues if something like this is going to happen. But then I believe it will just continue to march right on higher.”
So, what’s next? We are prepping our buy lists. We only focus in on the best stocks out there.
What’s a zombie investor, anyway? Read our latest white paper, Zombies Are Real, in partnership with Navellier & Associates.
So here’s what you do: go on a market vacation for August and come back in September. If you’re brave and want to stay and fight- stay calm, have your shopping list handy looking for deals. Adopt the icy dead calm of a dead person. When you buy, plan on dying for a while like a zombie. When you wake up- odds are you’ll be really happy when you see your statements.
For ideas on what the best stocks are to look for, check our archives of MAP 20s. Or look for our member’s only post of target deals we are looking at (coming soon).
This is the way the world ends; not with a bang or a whimper, but with zombies breaking down the back door. ― Amanda Hocking, Hollowland
Mapsignals finds tomorrow’s winning stocks. We also track the biggest losers: poor fundamental stocks that have massive sell signals.
The market is at all-time highs, still many stocks are losing. Here we discuss those stocks to avoid; the bottom 10. Here’s why…
Each week we produce a top 20 report for our platinum members. These are the the outliers…. the best stocks likely being bought up by big money. We also include a bottom 10 list; stocks showing big selling. This list is a warning: if you own them, look out.
To show you how good of a warning these are, here are all of the bottom 10 stocks from Q2 (130 stocks). How did they do?
Each bottom 10 is organized into a basket of 10 stocks. Performance is calculated from the date of the report and concluded through 7/23/19. Versus the S&P 500 (SPY ETF), there’s a lot of red.
Below are 5 stocks from those reports:
Here’s the bottom line: following the big money can help you predict a stock’s performance…both up and down.
“When the ’80s come back” in style, we’ll be ready. But, not the ’80s you’re thinking of. Our 80’s research gave us clues to an overbought market. That tends to happen after our ratio jumps above 80%.
A few short weeks ago we were decidedly bullish on the markets. You can see the post here (Fishing For Buyer’s In A Seller’s Pond). In it, we outlined findings that led us to believe the worst was behind us for the markets. You can see that the ratio was very depressed at 36%. But, today is a new day. Below you can see that the ratio shot up to 72%…so, what’s next?
Above we’ve circled a few areas. These are the times when the ratio started declining. That’s what we are watching for once we break into overbought (80%+).
Is this something to be worried about? No. The 80s is just an alert that the ratio will likely dictate when it’s time to pullback. We look at potential pullbacks as a great time to go shopping for great stocks on sale.
Bottom line: the 80s are great to look back on. Be prepared when we get overbought. Our readers can expect a special update once we break this level.
Ever wonder what happens when you marry Mapsignals’ superior stock picking skills with options? Juice happens.
MAP does options too- and we crush it. We take mostly long views on stocks and aim to win big. So far so good!
“No way! Options are risky and scary” you may say- and many think that way. But MAP’s expert approach actually reduces risk and shoots for a high win rate percentage. You may wonder what makes us experts in the field. We collectively have decades of experience trading options for the biggest smart-money clients in the world. If that doesn’t do it for you- we literally wrote and taught options courses for Investopedia (link here). And then there’s our stock-picking track record. After all, options are just another way to express an opinion on stocks. And this year is just another example:
Our options trades so far for 2019 breakdown like this (held until expiry):
That means we only lost money 8% of the time. We marry our superior stock picking ability- backed by many years of data, with our expertise on Wall Street as premier options traders. We bring that level of service to our clients in our MAP OPTIONS research.
Below is an example from 2/18/19:
Broadridge Financial Solutions, Inc. (BR) was trading at $100.35 at the time. Our options trade was:
Sell 1 BR June 90 Put @ $2, Buy 1 BR June 110 Call for $2
At expiration, BR closed @ 128.72
“We have lift off” says MAP’s 2nd half top stocks. Studies show only a small percentage of stocks are responsible for most of the gains in the market over decades. That’s what makes MAP’s search for outlier stocks worth it. The best stocks are almost always supported by smart money. That’s what we look for- big money buying the best stocks.
We are almost at the 2nd half mark of 2019, so let’s look at how our best stocks from the last half of 2018 have done thus far. In our white paper, Outliers, on page 12 we show how the strongest stocks tend to crush the market. Well, that’s exactly what happened based on the following chart:
The tickers that made up this hypothetical portfolio are listed here for our members only. We will be releasing the latest batch of tickers shortly after the end of June.
Bottom Line: leaders lead. Take your cues from the information found in how the best stocks trade.
When ETFs dump, get ready for a market pump. As if on cue- when ETFs puke that means the flush is complete- time to buy! Well, usually. We spent a long time researching this and released a big white paper in January studying the effects of an ETF washout. It means there’s a good chance for higher prices ahead. You can read it here.
In late May, we saw a lot of dumping in equities and ETFs. We’ve been very vocal (in our research) that we didn’t expect this selloff to be nearly as deep compared to December. Looking below, you can see how when there are large amounts of ETFs getting sold (red sticks), we tend to see a rip in the market soon after. Late May was the latest ETF dump…interestingly, our data lines up with a recent report of the largest ETF outflow for 2019 occurring in May.
Now, those sell signals are mainly equity ETFs. In times of market stress we also see buying in “safer” ETFs like bonds and precious metals. Below you can see the total ETF signals inclusive of buying. Those big spikes, often, align with market troughs.
Bottom line: when ETFs dump, get ready for the pump.