by Jason Bodner

January 3, 2024

Happy New Year! The party is just getting started, but beware! Champagne corks can pop out at 25 miles per hour, so watch your eyes, as Americans guzzle over 360 million glasses of bubbly each New Year’s.

Remember how we gladly toasted the new decade four years ago, but that now seems like a distant eerie nightmare, since COVID-19’s wicked arrival in America came just about two months into the new year. The unthinkable happened, and Planet Earth essentially shut down, as nearly everyone stayed home.

Once the realization came that life could continue, we resumed as much of a normal life as we could manage. Most of our “lives” took place online, as we worked, shopped, ordered food or socialized online. Stocks initially swooned, but the advent of a super-accommodative central bank policy and the realization that we could adapt, and even eventually thrive, gave investors some new optimism, and stocks soared.

For me, March of 2020 simultaneously feels like a very long time ago and only yesterday. Interestingly, looking at the stock data from the COVID-19 era and the last two months makes for an uncanny mirror image. This is important, because many investors are dubious of the latest amazing rally. I have made no secret about being bullish for the next year and beyond. But as always, I live in a world of objectivity and cold, hard data. So, let’s do some side-by-side comparisons between COVID and recent market trends.

Let’s start, as we usually do, with the Big Money Index (BMI) and the distribution of buying from when each rally began. First up, we have the 12 months from June 2019 through June 2020. The chart on the left is the BMI. You may recall that I talked about how in January, the market (blue area in the left chart) rose while the BMI started falling. This was the first indication that smart money was selling ahead of some major globe-changing news. Stocks continued to rise well into February while the BMI showed smart money continued to sell. It descended far in advance of stocks until it hit oversold, signaling a big reversion was near. This kicked off a nearly two-year rally of 115% in SPY, the S&P 500 tracking ETF.

The chart on the right shows what kinds of stocks led the start of the rally through the next four months. Notice how the largest rivers of money flowed into small- and mid-cap stocks.


Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Now let’s compare those charts to the last two-month rally. The BMI again is on the left. We see a similar pattern of overbought falling while the market remained resilient until it ultimately cracked:


Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The BMI hit oversold, prefacing a big reversion. The bounce came right on time and, as of this writing, we witnessed a 16.6% rally in the SPY. Remarkable as this rally may seem, when we look at the distribution of buying, once again we see immense inflows into small and midcap stocks, only this time, we see more buying than in the four-month post-COVID market, in only half the time!

Let’s compare the unusual buying and selling of stocks over the two timeframes. First, we notice that the initial selling “into fear” was off-the-charts as COVID’s reality hit. The subsequent buying was just as huge, and more intense than prior to COVID, when the world was blissfully unaware of the pandemic.

Comparing then to now, we see that same pattern of huge intense buying into the rally. That means stocks are not only going up, they are going up on unusually large volume, indicating institutional accumulation:


Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Next up we see the same thing for ETFs… COVID (mid-2020) on the left, today (late 2023) right:


Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The prior charts paint a picture of investors being on the wrong side and needing to correct their expectations quickly. You can blame it on short covering or value hunting or whatever you want, but the reality is that buying like this usually kicks off a big, sustained move.

Next, let’s look at which sectors led us out of the COVID crash and pushed stocks higher for the months and years afterwards. Then, we will compare that with today. For both periods, we see tech, discretionary, and industrials. Healthcare was strong during COVID for obvious reasons related to increased care.


Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

In each case, growth led us higher. We can see that unusual buying is happening in nearly every sector. Tech, discretionary, industrials, financials, and materials have seen intense accumulation. Real estate, staples, healthcare, utilities and communications have also been under accumulation. Only energy has not been rallying, as it is taking a pause from a peak +250% run since November 2020.


Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The symmetry of the two periods bodes well historically. The rally out of COVID realized more than a doubling of the S&P 500. This time around we are only up +17% so far, but there is one key difference: interest rate trends. When COVID hit, central banks flooded the world with money and lent it zero interest. That had the desired effect of sparking the economy and carrying us through a troubled time.

The undesirable side-effect was inflation. Today, inflation is still here but it is falling. Interest rates rose this time to combat nasty inflation. And as of right now, there is a significant 2+% spread between inflation and interest rates as evidenced by this chart (data from and


Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Since 1960, interest rates have usually been below inflation. This indicates the inversion won’t last. The Fed has already telegraphed 6-7 cuts through 2025. I suspect rate cuts will begin as soon as this quarter.

In this long-term chart, we are well below average inflation. Jerome Powell has said, for a long time, that he remains committed to a long-term goal of 2% inflation. Well, the average CPI (a proxy for inflation) since 1960 is 3.77%, nearly double his “long-term goal.” In essence, 2% is a unicorn, historically low.

I should also point out that while the average fed funds rate since 1960 is 4.79% and much lower the past 23 years: since 2000 it’s 1.77%. Inflation since 2000 averages 2.56% – still above the long-term goal of 2%. In short, rates will fall. I believe we are on the cusp of a long bull run for stocks. It’s only just begun.

Bottom’s up to a new year, but heed this famous warning from a writer familiar with such toasts:

“First you take a drink, then the drink takes a drink, then the drink takes you.” – F. Scott Fitzgerald

All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

Global Mail by Ivan Martchev
Emerging Markets are Overdue to Outperform

Sector Spotlight by Jason Bodner
Comparing Rapid Recoveries: Late 2023 vs. Mid-2020

View Full Archive
Read Past Issues Here

About The Author

Jason Bodner

Jason Bodner writes Sector Spotlight in the weekly Marketmail publication and has authored several white papers for the company. He is also Co-Founder of Macro Analytics for Professionals which produces proprietary equity accumulation/distribution research for its clients. Previously, Mr. Bodner served as Director of European Equity Derivatives for Cantor Fitzgerald Europe in London, then moved to the role of Head of Equity Derivatives North America for the same company in New York. He also served as S.V.P. Equity Derivatives for Jefferies, LLC. He received a B.S. in business administration in 1996, with honors, from Skidmore College as a member of the Periclean Honors Society. All content of “Sector Spotlight” represents the opinion of Jason Bodner

Important Disclosures:

Jason Bodner is a co-founder and co-owner of Mapsignals. Mr. Bodner is an independent contractor who is occasionally hired by Navellier & Associates to write an article and or provide opinions for possible use in articles that appear in Navellier & Associates weekly Market Mail. Mr. Bodner is not employed or affiliated with Louis Navellier, Navellier & Associates, Inc., or any other Navellier owned entity. The opinions and statements made here are those of Mr. Bodner and not necessarily those of any other persons or entities. This is not an endorsement, or solicitation or testimonial or investment advice regarding the BMI Index or any statements or recommendations or analysis in the article or the BMI Index or Mapsignals or its products or strategies.

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