Silence Is Deafening
Life ebbs and flows… chaos peaks, then the silence is deafening…
Take the family road trip for example:
Any family with young kids knows it’s crazy. There’s hectic packing, frantic requests for the iPad charger, and don’t forget to take out the trash. Anxiety soars, and you haven’t even left yet!
But as crazy as prepping feels, eventually the wheels get rolling and the highway opens up. The monotony of the 8-hour drive ahead sets in and calm blankets everything. It’s smooth sailing as everyone is quietly content knowing they are on their way.
Invariably you hit a congestion zone. Traffic bottlenecks and you grind to a halt. Progress slips away into the horizon. The adults get antsy. Kids suddenly need to pee. Moods sour and there’s nothing you can do.
So, everyone gets frustrated and quiet. And the silence is deafening.
Stress builds up to a breaking point. And when it’s all about to pop, usually things open up. The bottleneck starts clearing and everyone settles down. The pressure releases, and anxiety starts to fade. Smiles slowly return ????.
The car trip is a great metaphor. We constantly talk here about congestion zones popping up in life too.
Things build and feel overwhelming. Stresses all pile up. Family, work, finances, and deadlines all rob you of your time and head space. It all seems a bit much: your mood sours and there’s nothing you can do.
Then a single piece falls into place, opening room for the bottleneck to clear. Life starts looking up! That’s when I usually start singing some ‘90s jam!
Things seem to flip from negative to positive overnight. The stress melts into calm silence again.
Stocks mimic life. They have their own congestion zones. There’s usually a mania or two that ensues each year. The crowd feels good because making money seems easy. The party seems like it won’t stop.
This is good chaos, like in January. Our post, What goes up keeps going up shows how excited investors found an intoxicating rally. Everyone was bullish: the media, my neighbors, and even my mom!
Fast forward to April 15th, you can hear a pin drop.
This silence is deafening, but don’t stress because this is normal. Stocks are finishing their transition to earnings season. The bottleneck is loosening as slowly outlier stocks are getting bought up again. Which tells us a lot.
It means that quality buyers (smart investors) are back. We think it’s time to cue up the rally!
Let’s take it from the top…
Big Money Index Silence Is Deafening
Just about everything in our data is quiet. Volumes are light and intensity is low.
But the Big Money Index, which tracks big buying and selling in stocks is slowly tracking bullish. Look how red circles show prior bullish setups:
The BMI troughed a few weeks ago. So, while silence is deafening, we see positives that suggest a new rally party could be near… buying in stocks and ETFs is slowly increasing.
Investors Quietly Buy Stocks And ETFs
The Big Money Index is made from daily buys and sells. Momentum lifts and also tugs the index. But now, markets breaking to new highs usually entices buyers.
Below are daily stock buys and sells; this chart directly correlates to the BMI.
The good news is it is trending bullish entering earnings season. Circled below are prior times we entered earnings season:
While we expected stocks to eventually pop, now we’re starting to see it.
The market feels quiet because we are gearing up for great earnings.
And all is quiet on the ETF front too. However, buying is slowly increasing on the margin in this chart of ETF buys and sells:
To give an even better measurement of ETFs trends, we created a new indicator: the ETF Big Money Index.
While it is similar to the BMI, this one tracks the daily momentum of only ETF buys and sells. Notice how ETF action can lead market direction at the extreme points?
Once the ETF BMI line starts to ramp, juice tends to follow: more and more buyers tend to pile in. Near-term we expect this line to climb.
Speaking of juice, outlier stocks are perking up too.
Investors Are Buying Outlier Stocks
Data tells a strong story, but when we see the MAPsignals all-star stocks getting love… it tells an even stronger one.
Below is NVIDIA Corp. (NVDA) – it’s a semiconductor in beast-mode. Since 2015, it’s been a top stock in our research 53 times!
Source MAPsignals, End of day data sourced from Tiingo.com
It’s the outlier. The last few months were quiet for Nvidia, but that was then. When you see the best stocks on earth swiftly breaking out, more tend to follow.
And there are many following. Our Top 20 lists suddenly include some of our favorite stocks after a long silence. In other words, quality names are back to topping the list.
And for a focus list of the best stocks to watch, today we’ve released this month’s MAP 50 for subscribers. It’s packed full of our best names over the past six months.
As earnings season gets in full-swing, these are the stocks to focus on.
Here’s the bottom line: Markets flow from loud to quiet and back. We are in late-stage quiet, and the silence is deafening.
But the bottleneck is loosening. With a slowly rising BMI, a trough in ETF selling, and high-power growth names breaking out – expect JUICE.
And it’s coming…
For weeks we’ve been telling our subscribers to pick their spots on outliers on sale. That is what we’ve been doing here… all of that prep is usually done in the quiet times.
We’re in the car and the traffic jam is slowly starting to flow… who’s ready to get happy again? I think I’ll sing me some “Damn- I Wish I Was Your Lover!”