We Just got an Ultra Rare Signal – You’re Going to Like What It Means
I don’t blame you if you’re concerned about the stock market.
Today was a little better, but it’s been a painful two weeks for a lot of folks.
All three major indexes were down six days in a row through Friday, with the Nasdaq losing 5.5% in that time.
Nvidia (NVDA), the artificial intelligence stock that traded like it would never go down for much of the last two years, sank 10% on Friday alone. It was the stock’s biggest down day ever, and brought its valuation under $2 trillion.
Super Micro Computer (SMCI), the other red hot artificial intelligence stock, got hit even harder. It fell 23% on Friday… for the awful sin of scheduling its earnings report.
That’s a bit of an oversimplification, but not much of one. SMCI has preannounced positive results seven of the last eight quarters, so in a skittish environment, investors got nervous that no preannouncement might mean no blowout report – which amid the hype looks like the only acceptable result.
It’s crazy, of course, but I’ll let you in on a couple of data secrets about SMCI.
First, even with that 23% drop on Friday, my Quantum Edge system did not detect a Big Money sell signal. In fact, SMCI’s last unusual selling signal was way back in October of 2018. The last 12 months have nothing but buying (green bars) – and lots of it.
Source: MAPsignals.com
Multiple factors determine what constitutes a sell signal, but the absence of one on Friday tells us something. As one of the hottest stocks of 2024, a lot of individual investors piled into SMCI, and it looks as if they are the ones who bailed.
Super Micro remains a great company with a lot of potential as its high-performance, high-efficiency servers are designed for artificial intelligence applications. In my Quantum Edge Pro service, we’ve already locked in a double, and we still have one-third of our shares. At this point, the bigger question for me is not when to sell the rest of our shares but when to buy again.
I’m watching the data closely and will let my subscribers know when the time is right.
But I’m looking to buy more than just SMCI. This healthy and much-needed pullback is a good time to shop for quality stocks at a discount. These are the stocks with the Quantum Edge trifecta of superior fundamentals, strong technicals, and Big Money flowing in.
Pullbacks are the best time to buy these best-of-the-best stocks anyway, but after an extremely rare data signal that just triggered, now looks like an especially opportune time to get ready for what’s coming.
Ultra-Rare Signal Indicates Big Opportunities Ahead
I am exceptionally bullish about stocks over the long term, but even I was surprised at what I found analyzing recent data.
I created my Big Money Index (BMI) as part of my Quantum Edge system, and through years of live data and back testing, it is the most reliable market indicator I know of. It’s also a fantastic proxy for unusual money flows – the money that moves stocks.
It’s unique and stunningly accurate at pinpointing the market’s pivot points.
Here’s the rare signal I spotted: The BMI and SPDR S&P 500 ETF Trust (SPY) recently fell in tandem for five consecutive days.
That doesn’t sound like that big of a deal. You would think it happens fairly often, but it’s the complete opposite.
My data goes back to 1990 – nearly 33.5 years or 8,614 trading days. I dug deep into the numbers and found only 39 instances when went the SPY and BMI fell together for five straight days or more.
That’s a super-rare 0.5% of the time. Or, flip it around: It does not happen 99.5% of the time.
Now the good part: After these almost unheard of occurrences, stocks tend to rise.
The results are awesome. Looking ahead one month, three months, six months, nine months, and one and two years later, the S&P 500 is significantly higher – 11.3% after one year and 24.3% after two years. Stocks moved higher a stunning 80% of the time on average.
The data says to ride through this overdue volatility. Don’t sell great stocks you already own, and even more importantly, be on the lookout for high-quality stocks going on forced sale.
That’s what I’m doing for my readers, and I can do it for you, too.
Capitulation may be near, or it may take a while longer to play out. Either way, this super-rare signal says we should look to buy when others are willing to sell us great stocks at discounted prices.
Talk soon,
Jason Bodner
Editor, Jason Bodner’s Power Trends