by Jason Bodner

March 28, 2023

When my family was in Phuket, Thailand on Boxing Day, 2004, the animals were long gone when the tsunami arrived. It was the day after Christmas of our long-awaited family vacation. The birds outside our room window were loud every morning, but that morning the birds were silent when the ground shook.

I recognized the feeling of an earthquake, but the silence of the birds was what haunted me. About an hour later, when the tsunami came, people went to see the water recede, not knowing that was a sign that killer waves were on the way. The animals knew that, and they were all long gone. How did they know?

It turns out that earthquakes can generate electromagnetic waves that animals can detect hours or even days before the actual event occurs. This phenomenon is known as the “earthquake lights,” or “seismic lightning.” It is still not fully understood by scientists in a way that can deliver an early warning to us.

Something like this would be a powerful weapon to have in the tool kit of investors who fear the “coming crash.” For those in the know, something like it exists, and it is every bit as powerful as one would think.

The Big Money Index (BMI) is a 25-day average of unusual buying versus selling of stocks. The BMI is measured in terms of buys – so the latest reading of 30.9 means that 30.9% of all signals over the past 25 days were buys. That number has been dropping since February 15th. Market timers would have seen the BMI falling from overbought on February 17th, signaling outflows of big professional investors.

Big Money Index Chart

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

It would be great to know when the BMI will reach oversold, as that usually indicates a strong reversion (buy) signal. Well, the data tell me that the 25-day average of buys and sells is 30 buys and 111 sells. If the averages carry forward that way, then April 5th is the likeliest day the BMI goes oversold.

Whether or not that happens, to the day, remains to be seen. The intensity of stock selling has waned significantly, as you can see in the red bars, while it’s still higher than average, moving closer to zero.

Big Money Stock-B-S Chart

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

Now we can see something interesting this time in the pattern of selling and buying: The sector strength is in tech, discretionary, and industrials stocks. Weakness is focused in financials, utilities, and real estate:

Sector Rank Table

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

This indicates demand for growth sectors, and a distaste for rate-sensitive sectors. Financials are seeing obvious weakness from the latest tumult in the industry – like bank runs due to a crisis of confidence from depositors. (More on that in a moment.) For now, in terms of selling, notice the resilience of tech and discretionary stocks and the headwinds of financials and real estate stocks:

Technology vs XLK Discretionary vs XLY

Industrials vs XLI Materials vs XLB

Staples vs XLP Energy vs XLE

Health Care vs XLV Communications vs XLC

Financials vs XLF Utilities vs XLU

Real Estate vs XLRE

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

As for last week’s market volatility, the FOMC decision to raise rates 0.25% came out, with mixed reactions: The market thought that if banks failed in a fragile system, that would pause hikes and even pave the way toward rate cuts. Goldman Sachs saw a zero percent probability for a 0.50% hike, 75% for 0.25%, and 25% for zero. What we got was a goldilocks 25 bps: not too hot and not too cold.

Powell’s positive statements were that the banking system is “strong, resilient, and well capitalized,” but his negative statements acknowledged sticky inflation and the Fed’s commitment to an inflation target rate of 2%. One hawkish comment was: “There are costs to getting inflation under control.”

The estimated terminal rate is now 5.1%, with the Fed target range now 4.75% to 5.00%. This indicates we are pretty much done, with perhaps one more hike of 25 bps.

Powell supports further bank regulation and supervisory changes to prevent further missteps. He also encourages outside independent investigations. This would encourage new procedures to strengthen banking reserves to ensure depositor liquidity. His main message was that bank depositors should feel confident. A reporter asked if all depositors are now insured: Powell seemed annoyed but said: We have the tools and are willing to use them when necessary, implying that depositors should feel confident.

What he wouldn’t say is when to expect any rate cuts.

Markets rallied on his comments and then rolled over on Yellen’s comments saying that the Treasury is not looking at insuring all deposits.

The truth is: Inflation is sticky, but interest rate tightening pushed long-end bonds down enough to cause a crisis of confidence in liquidity for failing banks. After reducing the balance sheet nearly $900 billion in nine months, the balance sheet swelled by $300 billion in a week due to guaranteeing depositor liquidity.

President Biden ensured that American taxpayers would bear no cost of backstopping deposits that banks failed to collateralize, but let’s be clear: Even if acquired or merged, banks will recoup the value of their failing securities over the long run. They will also likely increase fees (overdraft), which will invariably hit struggling lower income families. It may not hit the taxpayer, but it will certainly hit someone.

What it means for stocks is that rates are near a plateau. Investors want clarity as to when cuts will come. Powell acknowledged that committee members were unanimous in that they don’t foresee cuts in 2023.

Economies change based on momentum. During COVID, the government flooded the market with free money, stimulus, and liquidity – like an adrenaline shot. The economy awoke from certain death. But breaking addiction is hard and takes time. We are addicted and want more easy money. The problem is that the Fed wants 2% inflation, which fosters long-term growth like we saw the past 40 years or so.

But those decades included various crashes, the internet bust, 9/11, the Great Financial Crisis, and COVID-19. It wasn’t continual economic growth, and those stresses all saw central bank intervention. Rate hikes aren’t the only tools for restrictive policy. Tighter conditions can happen if banks are required to increase reserves from zero to any higher level. It also happens with tighter credit (tougher borrowing). The fed has many tools, and the goal is to ensure smooth, sustained economic strength.

Our path is clearer now. Powell reiterated the Fed’s data-dependence, but he also acknowledged that their models are linear, and the economy doesn’t work that way, “which is why we need to be data dependent.”

It’s like having kids: sometimes you need to give them restrictions, so that long-term they are equipped to deal with the realities of life. I view the Fed’s job in the same way, only they walk a tightrope.

Narrowly missing a full-blown banking confidence collapse by a weekend is too close for comfort. The Fed doesn’t want to further damage a fragile economy. I envision a last hike of 25 bps in the next meeting. I also expect data starting to reflect mediating inflation in persistent areas like shelter.

Either way, once rates plateau, technology and discretionary stocks should benefit. This is likely why they have been rallying for months now as we near the end of the hiking cycle.

The market tumbled because investors want less restrictive policy. And in Bizarro World, bank failures were “good news,” as they tend to make the Fed stop hiking.

The fed’s message was that times may still be tough, but let me close with this quote: “We are all faced with a series of great opportunities brilliantly disguised as impossible situations.” — Chuck Swindoll

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

Please see important disclosures below.

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.

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.