Now’s the Time to Own Stocks – Here’s the Data That Proves It
I was never one of the “popular” kids – never part of that “in” group.
But I never felt the need to be.
The upshot is that I became an independent thinker. And I’m never afraid to embrace a contrarian view.
As long as those “outlier” views are based on data – specifically the right data analyzed the right way.
And as long as those views help me help me make money.
My latest outlier opinion is that the Fed may be finally done raising interest rates.
Investors who waited around for the central bank to “officially” conclude its rate-increasing assault on inflation have already missed a massive run-up in stocks. I mean, the S&P 500 is in a new bull market – up 25% in nine months.
In other words, those lollygaggers have missed out on more than two full years of typical market returns – delivered in just three quarters of a single year.
I’d be a fool to definitively pronounce that we’ve seen the last rate hike, especially after Fed Chair Jerome Powell explicitly left open the possibility of two more this year.
But, just remember that rhetoric is one of the Fed’s favorite weapons in its war on inflation.
It’s a strategy known as “jawboning.” Fed leaders know that hawkish comments put the crimp on stock prices and corporate spending – and make consumers a bit less spend-happy.
Yet I’d be an even-bigger fool to fear another possible increase or two – while ignoring data showing another Big Lift is on the way. And, to be totally honest, that high probability of the next Big Lift won’t change if rates increase, or stay where they are.
In short, the time for waiting to own stocks has passed.
If some of that record $5.3 trillion in sidelines cash is yours, now is the time to grab some of the market’s elite stocks – those with the big-profit upsides – right now.
The reason: I believe we’re heading to a powerful and profitable finish to the year.
That may surprise some of you, so let’s look at the data – including some numbers that worry-wart investors are ignoring.
It’s Undeniable: Inflation Is Falling
There’s no doubt about it.: The Fed is winning its war on inflation. In fact, the virulent price assaults on our wallets could end pretty soon.
Just look at the trend since the beginning of last year. Inflation rose above 9% in June of last year. But in the latest report we saw yesterday, it was down to 2.97%, giving investors hope that the inflation dragon would soon be slain.
That’s exactly what the Fed wants, of course. The first number is now a 2, which puts it in the neighborhood – almost the same block even – as the Fed’s target goal of 2%.
Given this data, it’s possible that the Fed won’t need to raise rates anymore. The next policymaking meeting is in two weeks, and almost everybody expects the that group to raise rates another quarter point.
I don’t think it’s a given. But even with another hike, we are so close to the finish line, and the economy is holding up enough, that Big Money is already investing for the end of rate hikes. And that’s our next data point.
Big Money Continues to Flow
I spent more than a decade matching up some of the biggest buyers and sellers of stocks in the world. You can call it “smart money” or “big money” or whatever you want, but studies have shown that institutions and hedge funds account for 70% to 90% of daily trading volume.
Perhaps it was because I had a front-row seat, but it didn’t take me long to realize that any investor who ignored the biggest blocks of money every single trading day was at an immediate disadvantage.
Big Money likes to keep its trades as quiet as possible, but after seeing the inner workings of it all, I knew I had to make monitoring and detecting these money flows a key part of my Quantum Edge system. It helps me know what’s going on in the overall market, and it helps me know what’s going on with individual stocks.
And this time around, it helped me know very early on that Big Money is investing for the end of rate hikes and not for a recession.
One of the important ways I gauge these money flows overall is through my Big Money Index (BMI). It basically aggregates all of the Big Money signals my system detects and tells us what percentage of those are buys. I always start my market analysis here because I get an instant snapshot of where money is flowing in a meaningful way.
Right now, the BMI is a robust 78.8. In other words, almost 80% of all Big Money signals are buys. Simple math tells us the remaining 20% are sells.
In other words, Big Money is buying four times more than it is selling. You can really see it since the end of May, which I’ve circled below. Those green bars are buys, and they completely overwhelm the red bars that are sells.
Where that money is flowing is just as important. If Big Money were expecting a nasty recession, we would see buying in defensive sectors like utilities, real estate, and communications.
In fact, it’s just the opposite. Those sectors rank the lowest, according to my Quantum Edge data.
And what’s at the top? Growth sectors – tech, discretionary, and industrials lead the way.
Inflation is falling. Interest rate hikes are or soon will be done. Big Money is flowing into the market.
And it’s all happening at the best possible time.
The Best Is Yet to Come
I expect a great finish to the year, but I also expect stocks to be choppy at times over the summer.
There will be pullbacks. Healthy pullbacks on ever-changing headlines.
And besides, historical data is conclusive that August and September are the two worst months of the year for stocks.
Those pullbacks will be buying opportunities because, in addition to the data we’ve already discussed, the market’s season data is equally convincing. The last quarter of the year cranks out the best gains of the year.
This year’s fourth quarter has the potential to be one of the biggest and best in recent memory. All of the key factors are lining up the right way at the right time, and with record amounts of cash sitting on the sidelines, there is no shortage of fuel to drive stocks higher.
Significantly higher.
Now is the time to get ready. And the best way to do that is to invest in cream-of-the-crop stocks with superior fundamentals, technical strength, and Big Money inflows. These are the stocks with the highest odds of making you money in any market and outperforming in strong markets.
That’s exactly what we’re doing in our Quantum Edge investing services. If you’d like to my help in finding those elite stocks, you can click here to learn more.
Talk soon,
Editor,
Jason Bodner’s Power Trends