Sector Balance Wins in 2022

Sector Balance Wins in 2022

There’s always opportunity in the stock market. The Big Money helps you spot it.

Sector balance wins in 2022.

Sector Balance Wins in 2022

This year has shown so many twists and turns for stocks. I’ve gone over the macro headlines constantly, so I’m not going to rehash them today. Rather, I want to just focus on data. And there’s been a huge theme this year: constant rotation.

Back in February I showed the relentless selling in Technology stocks. Then in March, value stocks started to lead. Fast forward to April and we see that “safer”, defensive groups are thriving.

That’s a lot to keep track of! That’s why today’s message is all about having some balance in your portfolio during rough periods like now.

There’s plenty of opportunity out there. Let’s dive in.

Sector Balance Wins in 2022

You know I like to start from the top. The Big Money Index is still noticeably elevated. Below you can see that it’s sitting near 66%:

Big Money Index (BMI) shows defensive buyers

You may be wondering why the BMI isn’t falling in this tough market environment. It’s because defensive groups are rallying higher. The following pie chart shows this beautifully.

Here’s the sector breakdown of buy signals in April. Notice that Healthcare, Staples, Energy, and Utilities make up 62% of the buys:

Percent Buys from Universe |

This is very defensive action. As fears of recession swirl, the Big Money has been piling into these dividend-rich groups.

Here’s what monster buying in Healthcare looks like:

Healthcare vs XLV shows dozens of pharma buys

Each of those blue bars are stocks. Dozens of large pharmaceutical companies are beaming with Big Money. Just having a small allocation to this group can make a big difference in a portfolio.

Let me show you what I mean. Just take Vertex Pharmaceuticals (VRTX) as an example. The buying has been relentless in this name:

Vertex Pharmaceuticals Incorporated (VRTX)

This was a MAP View pick back in late January and is probably extended at these levels. But the point I want make clear is this: Having just a little exposure to Healthcare can make a big difference in a portfolio. Sector balance wins in 2022.

Now let’s zero-in on the Staples group. When the market is fearful, smart money often flows into stable cash-flow rich firms. You can see that in the sector chart below:

Staples vs XLP shows buyers | Big Money Signals

Big household names are attracting Big Money. Food and large retailers offer a lot to like in this tape. Dividend appreciation and decades of consistency offer portfolio stability in times of market stress.

Let’s quickly round it out by checking in on Energy and Utilities stocks.

Hardy any selling has been seen in Energy the last 3 months:

Energy vs XLE | Big Money Signals

Elevated crude and commodity prices are keeping these stocks rallying higher. Having just a small allocation to the energy space can make a big difference in a portfolio.

Finally, we can see healthy buying in Utilities:

Utilities vs XLU | Big Money Signals

This is one of the most defensive areas of the market. The non-cyclical nature of a utility company can be quite attractive in a tumultuous market. It’s another bright spot in our data.

And all of this defensive action points to why sector balance is so important right now. Having stocks that zig when other names zag helps in this choppy environment.

Don’t give up!

Finally, if you’re curious on which stocks are top ranked in our research, later today we’ll be releasing our MAP 50 report to subscribers for the month of April. Here’s an overview of the sector breakdown:

There’s a broad array of sectors included in this list. It’s one of my favorite reports to look over and find investment ideas.

Let’s wrap up.

Here’s the bottom line: 2022 has been full of twists and turns. Markets have constantly rotated. Having exposure to multiple groups including Healthcare, Staples, Energy, and Utilities can offer ballast to a portfolio.

Even small allocations can make a difference. Sector balance wins in 2022.

***And if you want to see me use our data to spot opportunity, check out my latest video: Best Stocks To Buy Now for April 2022. Enjoy!

Always remember that the process is more important than the picks.

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