by Jason Bodner

February 11, 2020

The same fact presented from different sources can have outrageously different results. Like back in ’99 when Czech Prime Minister Milos Zeman defended his smoking habit. He said that it helped his country financially, saying: “Smokers die sooner, and the state does not need to look after them in their old age.”

It may be funny for a leader to say something like that, but in 2001 Phillip Morris took his lead and tried to sell the benefits of smoking to Czechs. Their logical argument was that smokers die earlier, saving the government millions on pensions, hospitals, and housing for elderly citizens. They cited an average 5.23 years of life lost for a smoker, calling them “indirect positive effects” of smoking (source: LA Times).

Let’s just say that advice didn’t go well. The media and political fallout from that Morris stunt was “bigly.”

Serious Cigarette Smoker Image

No one disputed the information’s accuracy – and the same is true for recent market action. Markets were overbought and buying was drying up. Our BMI was slowing, and the market started to soften:

Russell 200 Index versus Map Signal Big Money Index Charts

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

So, I wrote here (quite often), “Get your cash ready to buy a dip.” I had my cash ready, hoping to buy great stocks on a flash sale. I love doing that. The only problem is that the sale was like the real Flash. The market-wide sell-off lasted about one whole day.

"The Flash" Image

If you’re like me, I share your frustration. As buying screamed back, it felt like rushing for a subway train and missing it by a second, watching it zoom away, so the question remains: Are we out of the woods yet?

What the Data is Telling Us Now

First, let’s look at what happened to the shift in my data. When my buy and sell signals are netted together, we get a good sense of the future direction of the market. Looking below, you’ll see that green bars mean more buying than selling and red means vice-versa, more selling than buying.

My data said that the market went officially overbought on December 27th, 2019. The Russell 2000 (my data correlates better with that index, as it is composed of many more stocks) rallied another 2.1% over three weeks. Then my data started shifting, saying sellers were dragging the BMI a little lower. I warned of a pullback by the end of January. Looking below, you’ll see the Russell 2000 fell by a total of 5.3%.

Russell 2000 versus Net Buys/Sells Chart

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

I’m not a day-trader looking for the precise moment to jump in and out of markets. I’m a guy who wants to buy great stocks at reasonable prices. Long-term, I know of no better way to grow wealth. The point is that I was right about the pullback, but it didn’t last long enough for most of us to do anything.

So, are we out of the woods? We are not – not yet. The BMI is not rising yet. We need to see buyers back in control for a little while for that to happen. If and when it does, we’ll get right back to overbought levels in quick order, which means I likely won’t be buying stocks until they sell off again.

Last week showed chunky buying yet again. Looking at the sectors, we saw noteworthy buying in almost all sectors. These nine (of 11) sectors saw 25% or more of their stocks get bought in a big way last week:

  • Consumer Staples
  • Financials
  • Health Care
  • Industrials
  • Information Technology
  • Materials
  • Real Estate
  • Telecommunication Services
  • Utilities
MAP Signals Table and Bar Graph

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

The two exceptions were Consumer Discretionary and Energy. The first saw net buying, but just not as much as the other nine bullish sectors. So, we’ll lump that into the buying area (although it saw an equal amount of selling). That leaves Energy as the consistent underperformer recently. Buying dried up in energy stocks January 9th, then selling picked up. XLE has fallen about 10% since that buying dried up:

Energy Buys/Sells Chart

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

Alas, buying is back after a single sick day. What a trooper! Energy is unloved but everything else is on fire, so don’t allow frustration or Fear of Missing Out (FOMO) to lure you into loading up. Prepare your buy lists in anticipation of some corrective price action. The market is digesting impeachment acquittal, the hangover from the January Effect, and the realization that maybe, just maybe, coronavirus won’t eradicate half of all life on this planet. Great stocks are lying in wait to be scooped up when prices correct and, judging by the one-way price action on the way up, I sense it will feel scary and uncomfortable on the way down. Sick-to-the-stomach moments are usually the time to trigger your buy list. So, have it ready.

We are not giving the all clear, but the BMI is still falling. It is a lagging indicator, but usually a great gauge of things to come, so keep that in mind while you focus on outlier stocks you want to grab on sale.

The real Confucius said it better than the Fortune Cookies ever could. Confucius said: “Success depends upon previous preparation. Without such preparation, there is sure to be failure.”

Confucius Quote Image

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

Please see important disclosures below.

Also In This Issue

A Look Ahead by Louis Navellier
The Good Economic News Keeps Rolling In

Income Mail by Bryan Perry
Good Tidings for the Average U.S. Household

Growth Mail by Gary Alexander
Will the Coronavirus Infect This Bull Market?

Global Mail by Ivan Martchev
New Lows Coming for Crude Oil?

Sector Spotlight by Jason Bodner
The 5% Correction Was Over in a Flash. What’s Next?

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:

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 or by requesting a copy by emailing 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.