DeepSeek Fears Revealed the Weak Hands
The DeepSeek surprise proved how quickly equity prices can rerate.
Some of the biggest winning stocks flopped at a magnitude rarely seen.
Ultimately, DeepSeek fears revealed the Weak Hands.
We’ve described weak hands before, back in 2020. It’s the new investors who lack conviction in their trades.
Possibly they bought into the A.I. trade in December, only to get spooked out in January. On the trading desk we’d call this LIFO traders: Last in, first out.
While it’s easy for me to play Monday morning quarterback, given much of that carnage has dissipated…the simple reason I’ve stayed constructive throughout the pullback is due to healthy institutional buying.
As long as the Big Money Index (BMI) is heading due North, my bullish stance is grounded, backed by years of studying money flow trends.
Today we’ll dissect the Big Money landscape. Then we’ll isolate the areas under strong accumulation.
Finally, I’ll cap everything off with 2 all-star stocks winning this earnings season.
DeepSeek Fears Revealed the Weak Hands
Investors felt the brunt of Tech liquidations on Monday. Many of the hottest groups were beaten to a pulp.
The VanEck Semiconductor ETF (SMH) had one of its steepest daily declines in years, crashing 9.8%.
Bellwether semi-names like NVIDIA (NVDA) slid 17%. On the surface, it felt like game over.
But acting on emotions rarely offers value when it comes to trading and investing. A better strategy is to rely on cold hard evidence-rich data.
The BMI is rapidly gaining, proving that money is being put to work, even during Monday’s Tech wipeout.
Here we can see a 2-week reappraisal of the BMI, jumping 14 points from 37% to 51%:
Focusing solely on broad index price action is iceberg analysis. There’s a deeper world of information when you dive below.
While weak hands traders were sloppily liquidating tech shares, we noted healthy accumulation. Below reveals this beautifully.
Monday – Wednesday saw 225 discrete names bought and 112 equities sold. That’s a ratio of 2:1 in favor of the bold traders strapping on the helmet and putting capital to work.
Money rarely leaves markets…it rotates. New bets were placed in small-, mid-, and mega-caps:
Which sectors attracted sizable capital this week?
It may come as a surprise, but analyzing Monday – Wednesday’s flows spotlight 3 areas under healthy institutional accumulation:
- Technology stocks accounted for over 1/5th of inflows, coming in at 22%
- Health Care amounted to 19% of buys
- Discretionary saw 17% of capital
Here’s a pie chart detailing the last 3 days of buy activity:
We shared our thoughts with members during the heat of the moment on Monday. We saw positives.
Then on Tuesday for PRO members we offered 6 all-star signal studies on stocks due for a bounce.
Our stance from last week that money is chasing high-quality tech stocks is only reinforced.
Obviously sitting through Monday’s wreckage wasn’t fun for anyone. But that’s part of the investing journey.
Now you know why the BMI is rising!
DeepSeek revealed the weak hands!
Here are 2 earnings winners to lean into, only our MAP Pro subscribers can see.