Shakira claims that “hips don’t lie” – Mapsignals can’t speak to hips, but we can speak to rips…rips in big money buying.
As we prepared for a 5% dip in the market, under the surface, our data was saying that big money was stepping in to buy. Big money buying can precede a rip in stocks. Remember, when you look at big money buying on thousands of stocks each day, when it starts to shift – we shift.
Our readers were prepared. We got out in front of this – in fact, we pointed to big money buying last week…the kind that we haven’t seen in 6 weeks. Check this out:
Before last week, we saw more selling than buying for 5 straight weeks (August). Typically, big selling lasts for a while. It comes in clumps. Then, it slows. Then, buying grows. Rinse and repeat.
So, what does big selling and big buying look like?
Let’s go back to late July for a moment. Up until then, week after week we were seeing more buying than selling. It looked a lot like the below from July 28th:
But then something shifted. Below is what tipped us off that something was changing in August. Big selling was bigger than buying – that was different…that’s the shift. This is from August 4th:
As we all know, the month of August was ugly. Selling got bigger and bigger. I’ll spare you the charts of what big selling looks like. It’s a lot of red.
Then we hit a level that historically says a ~5% dip could be coming. It didn’t come. Check out what did come, though – big buying showed up again out of nowhere. This is from last week. This was the shift:
This new information led us to believe that “rips don’t lie” – rips in buying. Our big money index stopped heading lower. We even went out with this message on Sunday (9/8/19):
So, where are we now? Well, buying this week has been big. The big buy signals started last Wednesday – that’s when the story started to change. Since then, IWM (Russell 2000 ETF) has ripped 6.2%! This looks a lot like a massive unwind…a wicked reversion.
Here’s where we stand mid-week:
Bottom line: our data is showing very big buying. This is very bullish. Big buying can tip you off to a market ready to rip.