by Jason Bodner

March 16, 2021

“Welcome to Fight Club. The first rule of Fight Club is: You do not talk about Fight Club.”

This awesome 1999 movie details the experience of an insomniac who seems to be simultaneously experiencing an awakening and an unhinging. It’s pretty powerful stuff. It addresses several emotional themes, including support groups, emotional illness, even Multiple Personality Disorder.

Fight Club Photo

When it comes to MPD – now known as Dissociative Identity Disorder (DID) – it’s an amazing, frightening and tragic condition, but that doesn’t stop several famous people from achieving great successes in life, despite having the disorder. This is by no means a complete list, but the following celebrities have been either diagnosed with or identified as likely having DID: Aaron Carter, Britney Spears, Roseanne Barr, Adam Duritz, Niki Manaj, Hershel Walker, Lady Gaga, and Marylin Monroe.

And for the last few trading sessions the stock market acted like it is also dealing with “DID.”

It’s like watching the “Dr. Jekyll and Mr. Hyde,” only with stocks. We have seen fearful angry bouts of depressive selling, especially in tech stocks, then we had euphoric highs of almost reckless buying, also in tech stocks. We also saw flat-lining markets with deep turmoil under the surface.

This can be terribly frustrating and confusing for investors trying to plot a long-term course for stock prices, and this is especially hard for any “gut feel” investors who trade based on sentiment, or emotion.

I tried “gut” investing once, and it worked out terribly for me. I didn’t turn to tea leaves, I turned to the data. That was in 2002, and I’ve reversed my stock picking fortunes from bad to good ever since then.

So now that we have hit a patch of wild turbulence, let’s look towards the data to see what we can see.

Our first stop is the trusty Big Money Index (BMI). In January 2020, the BMI went overbought. Back then, I warned that it could stay overbought for a while. They key was to watch when it started falling. Sure enough 17 trading days later (about 3-1/2 weeks). it started to fall. It seemed frustrating that markets continued to rise as the BMI fell. That meant Big Money was exiting stage left and greedy investors were buying what the Big Money was selling. This is when I more or less said, “be careful, lower stock prices will soon follow.” It wasn’t until late February that the market cracked. And my, how it cracked! Of course, I didn’t know a pandemic was coming in January, I just knew that Big Money was getting out.

Then it went oversold. My data allowed me to predict a market bottom for Friday March 20th 2020. It happened one trading day later, on Monday, March 23rd. Thirty years of data allowed me to make that call. History told me that when we got deeply oversold, it doesn’t last. We should expect a big rally.

That played out on cue. as well. Markets began their awesome 2020 recovery the next day, March 24th. Then stocks went overbought for a stunning 84 trading days (nearly four months). The BMI suggested investors would do what they did for the prior seven presidential elections. Thirty years of BMI said to expect investors would dump stocks going into the election and buy them like crazy immediately after.

That, too, played out perfectly. Then the BMI went right back into overbought territory.

Again, I said to watch for when it starts to fall. It did start to fall in late January 2021. I warned you of expected lower stock prices, which came until the Robin Hood bailout of the poor shorting hedge fund managers. After a brief revival, the BMI started to fall again late February suggesting volatility ahead.

Once again, the BMI nailed it. Late February and early March were bumpy for stocks. Look here how it played out the last 12 months (the red circles indicate the BMI falling from overbought):

MapSignals Big Money Index

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

Sellers pounded growth and tech stocks, but they gleefully bought “reopen” stocks: things like travel, restaurants, financials and industrials. Then for a few brief days, investors sold it all and puked out stocks.

These look like personality changes on a dime, once again and we saw crazy buying. So, is it over?

We first need to look for a rising BMI. Sure enough, after bottoming at 74.8% on March 5th, it started lifting.Money MAP Signals Small

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

Now that we have a rising BMI, for stocks to lift, the BMI has to continue to rise. It can only rise with lots of buy signals. That doesn’t seem likely, given all that selling we witnessed as recently as Monday, March 8th. But this past week saw huge buying: 742 stock buys versus 175 sells. That’s big, so big in fact that eight of the 11 sectors flashed yellow on my Big Money Sector report. Yellow means more than 25% of the available universe of stocks saw buy signals – everything but Tech, Health Care and Utilities.

MapSignals Sector Rankings

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

We saw monster buying in Energy, specifically Upstream and Downstream Energy. We also saw huge buying in Financials, specifically banks and insurance. There was buying in everything, even tech. With the recent “tech-wreck,” we saw some buying in hardware and even the beleaguered software group, so the market’s personality has been flip-flopping to mind-bending levels recently.

Are we back on track? Wild as it may seem, my data says we are. This action of recent opportunistic buyers points to a more bullish than bearish narrative.

I am trying to find deals on stocks, but it’s difficult to act on these bargains as beaten-down tech stocks have swiftly recovered. Remember, as Louis Navellier says, good stocks bounce like fresh tennis balls. I saw some of my own stocks fall -35% from their February peaks only to rally +37% within three days!

This March Madness reeks of some forced selling – the kind of “flush out” we seldom hear about – but either way, the data is clear, so near term, I am bullish.

And in case you think I may have multiple personalities, I came across this anonymous quote: “The good thing about multiple personalities is that if you have enough of them, you’re prepared for any situation.”

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

Please see important disclosures below.

Also In This Issue

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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