Tariff Impact Could Send Big Money Index Oversold
We’re in interesting times indeed.
Yesterday’s Liberation Day speech is sending equities spiraling lower.
There’s a thread of good news: The tariff impact could send the Big Money Index oversold.
The amount of news coverage and estimates forecasting the twisting economic path will make your head spin.
While the market pullback is painful and nauseating to sit through, I firmly believe much of this tariff tit-for-tat will ultimately resolve itself… eventually.
Instead of me opining on the what-ifs, the better strategy is to follow the money flows. It’s in cold-hard data where clarity exists.
We’ve been through so many unprecedented events before including COVID-19, the bear market of 2022 and other steep drawdowns.
Our Big Money Index (BMI) helped us navigate every single period…ultimately to better days.
Today we’ll revisit our oversold playbook, trying to understand what to expect in the weeks ahead should we reach the ultimate green zone.
History has taught us that some of the best equity deals you’ll ever get occur during these brief oversold windows.
Cheer up.
This rare signal could be here before you know it.
Tariff Impact Could Send the Big Money Index Oversold
It takes a lot of weakness to send our BMI into the green zone.
I like to say that the Big Money Index is the final indicator that’ll reach an oversold status.
It’s a slow-moving indicator tracking big institutional footprints.
During times of extreme uncertainty, this barometer has led the way.
Back in October of 2023, we went against the crowd with 2 bear killer signals. I’d encourage you to read that post.
Likely our biggest call came on March 19th, 2020 when we sent the marines. The world was upside down. We trusted data.
I won’t be betting against this indicator if we reach oversold…and neither should you.
Here’s where we are today (38%) and I’ve highlighted all oversold moments since 2016. A true oversold BMI reading is 25% or lower:
To be clear, it takes a lot of carnage to get oversold. More on that in a sec…
So what could actually lead to market stability?
At this point it’s anyone’s guess. Countries could come to the table and negotiate.
Or the Fed may have to cut interest rates.
As of this morning, the U.S. 10Y yield is falling hard as investors seek the safety of treasuries:
This is important to keep an eye on because the Fed can’t fight market rates forever.
As of this morning the CME’s FedWatch tool is pricing in 80bps of cuts in 2025, up from 65bps a week ago.
To be fair, forecasting the path of interest rates has been a fool’s game the past year.
So let’s not focus there today.
Instead let’s use the Big Money Index for a data-driven forecast that’s offered immense value during the most troubling market episodes in recent history.
A few weeks ago I discussed what we can expect prior to and after we reach an oversold BMI.
I’m going to reuse the graphic of that signal study. As a reminder, back to 1990 (including backtesting) we’ve reached oversold only 25 times.
Here’s are the important takeaways:
- First: small, mid, and large-caps suffer in the weeks leading into an oversold reading. Correlation hits 1 as all stocks drop.
Second: This is the most important development. Once we are oversold, it often ignites a wicked breath-taking rally.
Note the path below.
As we get closer to the green zone, stocks begin to firm up before a powerful melt up.
Now it’s time to flip the tone of today’s message.
I’ve covered the tough times narrative…but it’s time to focus our attention on data with an outstanding track record.
Our data has been trying to firm up over the past week…but the latest tariff impact could send the Big Money Index oversold…and that’s a great thing!
I can’t dismiss the discomfort that market drawdowns inflict. But it’s important to keep a steady head and focus on best of breed companies.
If and when we reach a rare oversold BMI, you’ll want to bet on the outliers loved by institutions…that’s where our process shines.
Don’t get lost trying to keep track of daily headlines…
Follow the money flows.
During times of distress, make your process simpler.
Soon we will be offering a PRO update discussing this data and oversold stock opportunities.
The data will likely be extreme in the coming days.
Be assured that at some point, the BMI will begin to head northbound… indicating big institutional inflows.
You won’t want to miss it.
You’ll just need a map to see it!
If you’re a serious investor and are looking for a high-level evidenced-based approach to money flows – now is one of the best times to become a MAP Pro subscriber.
***Lastly, join co-founder Jason Bodner as he presents: Find Market-Beating Stocks and ETFs in 2025: 1-Click Quant Analysis at the 2025 MoneyShow Masters Symposium in Miami.
He’ll discuss our proprietary 1-Click Quant Analysis method of picking market-beating stocks and ETFs. Happening May 15th–17th, at the Hyatt Regency Miami.
Just click the image below. You don’t want to miss this!
