by Jason Bodner
December 6, 2022
Rites of passage are not always obvious. For instance, I bet you didn’t know that when the Apollo 11 astronauts (Armstrong, Aldrich, and Collins) came back home from the moon, they had to clear customs.
Amazing, but true!
“Declare that rock! Where did you buy it? What is the retail value?”
Some rites of passage are happening in the stock market right now, although it may not seem that way…
As we wind down 2022, tensions are running high. Investors are rattled and on edge from a year wrought with war, politics, and economic fear. Recession fears have impacted stock prices in a far worse way than the reality of a global virus, still claiming human lives. It’s a sad commentary on what we hold dear.
Fear sells headlines. At beautiful Jackson Hole in late August, the Fed Chair kept pounding away on the need for “more pain.” Today, some see a housing-led recession, echoing the 2008 Great Financial Crisis.
That’s a tough backdrop. But here’s the thing: Stocks are recovering. The market has a funny way of not always following what the headlines say it should do. By now, you know I have been bullish on stocks. The funny thing is, I genuinely don’t care for the labels “bullish” or “bearish.” They denote an emotional bias. I prefer to deal in black-and-white data that can drive probabilities as opposed to a bias, or opinion.
The good news is that the data looks strong for a continued bull run. Let’s break down an eventful week through the lens of what we chart – “unusual buying and selling” data.
First off, in case you missed it, on Wednesday, Fed chair Jerome Powell gave a speech in which he telegraphed that the December rate hike would likely be just 50 basis points – lower than the expected 75 bps. He included hedging language along the lines of we’re not there yet, and rates may need to stay elevated for a while. The market didn’t care – all it heard was “relief,” so stocks staged a stunning rally.
The net result was some stunning technical “rites of passage” that flew under the radar. For instance:
- The S&P 500 is trading above its 200-day moving average – a key technical level. Also:
- The Dow Jones Industrial Average traded 20% above its recent low, a bull market signal.
Now, let’s dig into the data I watch to see some other indicators that can tell us whether this is the beginning of a sustainable bull-run or just another head fake.
- The Big Money Index (BMI) is rising steadily to levels only seen this year in February and August.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
It gets better. As you can see here, stock buying exploded to levels not seen since February 2021. An explosion of buying coupled with an absence of selling is a strong indication of a real uptrend.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
- Pair that with immense ETF buying, and that further strengthens the technical setup. ETF buying was monstrous out-of-the-blue, eclipsing levels not seen in over two years. Also notice the lack of selling:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
- Looking at the buying distribution last week, we see small and mid-cap stocks once again ruling the roost. It almost feels as though investors had a standing order with their brokers to buy their favorite stocks as soon as the Fed said anything remotely encouraging:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
- Another sign is “breadth” or wide distribution. To see if a rally is real, watch to see if the buying is fragmented or evenly distributed. Many rallies of the last year only focused in certain sectors, such as energy or staples. Last week, the buying was much more evenly apportioned. It’s also encouraging to see a sudden interest in tech and discretionary, as they are typically growth engines for new bull runs:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Naturally, one week does not a bull market make, but all these trends have been happening for weeks, and now all of these various technical indicators gave us the “cleared customs” stamp last week.
To see the sector distribution in action, look at the sector buying and selling charts below. You will find them roughly organized from top to bottom in terms of which saw the most buying.
Here’s what to look for: Tech, Health, Financials, Discretionary, and Staples stocks were bought heavily. Materials, Industrials, Energy, Communications, and Real Estate all saw buying too – although less intense than the prior sectors. Only Utilities say more muted buying. But most importantly: there is no selling to speak of. In a year stained with red, the past few weeks have been relatively red-free.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Sector rankings still favor energy, industrials, and staples. But we are seeing a clear shift in attitude towards tech, discretionary, and financials shares, which is a positive sign for a more meaningful bull.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Add recent action to the studies I’ve highlighted, and we get the big lift I’ve called for since August.
I also said that markets are historically strongest October through December since 1990. I also said that mid-term election years are strong this time of year. I also told you November through April of mid-term election years are positive 100% of the time since 1980 with an average S&P 500 return of +12.6%.
Add all this together and it looks like smart investors aren’t buying the bearish rhetoric. Bearish bias is more of a hunch than data based. As W. Edwards Deming said: “In God we trust, all others bring data.”
All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Is China Facing Another 1989-Style Revolution?
Income Mail by Bryan Perry
Fed Policy and Oil Prices Are Key Year-End Factors
Growth Mail by Gary Alexander
Inflation Will Likely Be “Transitory” Indeed (2021-22, R.I.P.)
Global Mail by Ivan Martchev
We Are Reaching a Possible Inflection Point in Both Stocks and Bonds
Sector Spotlight by Jason Bodner
Bear Markets Turn into Bulls Through “Rites of Passage”
View Full Archive
Read Past Issues Here

Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT
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.
Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.
Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.
None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.
Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.
One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.
ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:
- ETF shares may trade above or below their net asset value;
- An active trading market for an ETF’s shares may not develop or be maintained;
- The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
- The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
- Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.
Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.
Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.
This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at www.adviserinfo.sec.gov or by requesting a copy by emailing info@navellier.com. All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.
FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.
IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades. Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.
Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.
Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.
FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.