It’s a cringeworthy phrase.
No one really likes hearing it as we humans crave consistency.
That’s why it pains me so much to say it now.
This time it’s different.
Like in life, change is the only constant in markets. However, what we are witnessing this year is like no other change before it. In 2020, we are going from extreme to extreme.
On March 19th, in the depths of financial market hell – at MAPsignals, we strapped on our helmets and called to send the marines. Chaos was unprecedented, but the data pointed one direction – UP.
When stocks go deeply oversold, we buy in droves. And when stocks go overbought for months, history says to expect a pullback. But- and now here it is: this time it’s different. There are simply no sellers to be found. And when there are no sellers, markets are going to stay bid.
So, things are in fact different: we are in the longest overbought period ever going back to 1990. Regardless, we are still going to be us and follow the juice.
What that means is this: there is opportunity in all markets. Great stocks continue their greatness in oversold and overbought markets too. MAPsignals finds the stocks seeing the big money. That’s the advantage we learned to trounce the markets.
So, while things in the market are different, following the Big Money gives us the same old edge we’ve enjoyed since we developed this system years ago.
Let’s dig deeper. First, we’ll look at where we are in the current extreme environment.
When Markets Make No Sense, This Time It’s Different
Stock markets do tend to go from one extreme to the other…but each extreme may have different reasons.
Back when Jason and I were slinging stocks around on trading desks, there always needed to be a reason for why a stock went up or down. Traders would ask nervously over the hoot (our intercom system linking hundreds of traders across the world talking to thousands of hedge funds): “any reason ABC stock is down?”
They needed to give their client information on their stock. They saw it sink but didn’t know why. The very fact that they were asking the question highlights something important: there often isn’t an obvious reason. But one reason is as old as the hills: stocks only move based on supply and demand.
I can recall countless times when we were the axe in a stock: which means, all the big money trading was happening through our own hands. Here’s an example: Let’s say XYZ stock usually trades 500,000 shares per day. Now imagine we had a big order to buy 2,000,000 XYZ shares “best way.” That’s trader speak for get me the best prices but whatever you do- get my order done.
Can you guess which way the stock goes? Logically it goes UP.
So for fun, we’d get on that loudspeaker asking our couple-of-hundred salespeople if they had heard a “reason” for why XYZ was up that day.
We would laugh when we would hear the reasons flood in:
“Baird released a positive report.”
“Cramer made positive comments.”
“Hearing a sovereign wealth fund is buying.”
This was the stock trader equivalent of making prank calls. The countless reasons made us crack up because we knew the real reason. We were buying it! Simple as that: we needed to buy more than was available.
But imagine if someone asked why the stock was going up and we answered: “because someone is buying it.” We tried that a few times and it really ticked people off.
People need a reason.
I’m telling you this story because right now the market is seeing demand like this. Big orders are likely all over the place, rocketing stocks to the moon.
Why is the market overbought for so long? Because there are only buyers and no sellers.
That’s why the Big Money Index is staying overbought for so long too:
So, now you know why this time it’s different for an overbought market. History said to expect a pullback, but buying is relentless. The law of supply and demand simply says we have a lot of demand for stocks.
Only when supply increases, can we expect anything different. Who knows what the reason will be, but rest assured there will be plenty to choose from.
The Power Of Big Money
We’ve witnessed a pandemic and the rally of a lifetime and MAPsignals was all over it.
But if we are so smart- then how did MAPsignals do?
I’m glad you asked!
First, let’s look at the past year. These are the weekly stock profiles our subscribers get in the MAP View. The great thing is, these stocks include a bear market and our current overbought heights.
These are the weekly picks from the 2nd half of 2019 and the 1st half of 2020.
The performance is from the date initiated (usually sent each Sunday evening) and held through yesterday’s close, August 12th, 2020. We will compare it to the S&P 500 (SPY ETF):
Ladies and gentlemen, when you beat the market by 73% – that’s what we call juice!
But, don’t draw your conclusion just on that alone. Judge us on our ideas when the heat was on.
We sent a special report to our members only right after we went oversold on March 19th, spotting opportunity.
On this post we saw an incredible setup and gave 15 Big Money stocks we considered as great buys. We also walk our talk: we own a bunch of them.
The S&P 500 (SPY ETF) since then is +41.79%…which is astounding. But, that was nothing compared to our favorite Big Money stocks:
In one word – JUICE!
Bottom line – we can safely say that concerning the overbought market in 2020: this time it’s different.
What isn’t different though is winning by following the Big Money.
Wherever it goes – we will follow.
We hope you come too.
And the next time someone asks you why the market is up so much- tell them a reason they want to hear. But in your head you’ll know the truth: it’s because Big Money is buying it.