by Jason Bodner

April 14, 2020

The year seems virtually over, and it’s only April.

I mean, we’re all stuck at home. I hear how people are eating like crazy and wine glasses are always full.

There’s nothing to do, right?

It’s our nature to seek distraction. Have you ever heard someone say, “If I’m not busy, then there’s too much room for thoughts to take over”? We’re all running from ourselves in some way, yet now we’re literally forced to stop and reflect, but many just can’t handle it and are going stir-crazy.

So it’s doubtful that anyone sees the rest of 2020 as “full of opportunity,” right? It seems near impossible, then, that we could one day look back at 2020 as “The Year of Wonders.”

But reflective go-getters might love quarantine. Such was the case for arguably the brightest scientist in history. In 1665, Isaac Newton was in his early 20s at Cambridge University when the Great Plague of London hit, eventually claiming 25% of that city’s population. Cambridge and other universities did the early version of distance learning, sending students away from campuses, “social-distancing” in the 1660s.

Newton suddenly found himself out of his prestigious school and stuck at home 60 miles away. With no Netflix to binge-watch, he did the next best thing: He altered human understanding forever.

  • He continued his Cambridge work and completed his original concepts that became calculus.
  • He messed around with prisms and developed his theories on optics and light.
  • Outside his window was an apple tree. Yeah that Historians debate whether an apple actually fell on his head or not, but it was there and then (in quarantine) that he birthed his theories of gravity and began the laws of motion.

Not bad for self-isolation time.

Got Bored - Invented Calculus Image

Naturally, I’m not suggesting everyone can go into a cocoon and emerge as a history-altering scientific genius. But, at bare minimum this should show what’s possible with some “free-time.”

I’m using the time to learn a new programming language and finishing some musical projects I’ve been “meaning to do.” But I’m most excited about collecting market data during the most volatile market since the Great Depression. What that data is saying is fascinating. It’s different from what the ugly news says: deaths mount, new cases slow but are still growing, and global economic shutdown is causing disastrous effects. Ray Dalio says we will see another Great Depression. (The news media love this kind of talk.)

I don’t see any comparison to the 1930s:

  1. The post-1929 stock market crash found the Fed raising interest rates. This 2020 crash finds short-term interest rates cut to effectively zero.
  2. Post-1929 there was no liquidity. The Fed reduced money supply. Today, Fed chair Powell just announced an additional $2.3 trillion of loans to provide liquidity to the U.S. economy.
  3. We are not alone; Europe and Asia are also pumping liquidity into the system.

So, we now have an extremely accommodative monetary policy – while the 1930s was tightening. The hoped-for V-shaped recovery looks more like it will be a U-shaped recovery. I see it playing out like this:

  • By May 15th, we will see the first signs of a reopening, largely for optics.
  • By June, we will have a functional “soft” opening.
  • By September, we will see signs of more “normal” economic activity
  • We will start to see growth in December
  • By March 2021 and forward, YOY comparisons will be the best of any point in history

Those are my thoughts. Most importantly, the data tell us that stocks have bottomed, while the bears still call for lower lows (see New York Times, April 10, 2020: “Everything is Awful. So Why is the Stock Market Booming?” In reality, as bad news peaks, the market typically emerges from its lows. Equities find a base. Volatility is coming back towards earth. The VIX (volatility index) peaked at 85.47 on March 16th and fell 50% to 41.67 on April 9th but we need another 50% VIX drop to 20 to feel ‘comfortable.’

The Big Money Index (BMI) agrees. That’s our index of unusual buying. When it is high, the buyers are in control. When it is low, sellers are in control. It bottomed at 9% on March 27 and it has since risen to 24.7% on April 9th. Remember, 25% and below is “oversold,” so we seem about to emerge from oversold territory. That’s a powerfully bullish indicator over Mapsignal’s 30-year data history.

Russell 2000 versus Net Stock Buys/Sells Chart

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

Map Signals Big Money Index Chart

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

It’s important to know that the BMI is not rising because of a bunch of buy signals. We have big volume on stocks going up, but they are not near technical levels high enough to make a buy signal. The index is rising because selling has evaporated. This makes sense as the biggest March fund liquidations are behind us. This means that the BMI can rise quickly even on low buy/sell signal counts.

All this means is that we just need to observe how the market behaves in the coming weeks. We want to see more stocks make buy signals, indicating the market is starting to price in a more controlled recovery. The data clearly says market lows are in, and once volatility dies down, outlier stocks reveal themselves.

I am 100% data driven. Emotion has betrayed me in the past, and sentiment often doesn’t correlate to the market outlook. In fact, the opposite is more likely true: The market cavern matches the fear summit.

As for what’s next, I think the worst case is that the S&P 500 pulls back by half of the rise from the low. Translation: worst case S&P at roughly 2550. I wouldn’t bet on us revisiting the low of 2192.

Data helps describe long-term models of reality. Emotion can cause major short-term dislocations. We know that happens, but it’s important to keep perspective. When it comes, find answers in data.

Sir Isaac Newton took the time he was given and saw opportunity dressed in tragedy and fear. He also knew that emotion could become logic’s enemy when he said: “I can calculate the motion of heavenly bodies, but not the madness of people.”

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
Never Short the Fed

Sector Spotlight by Jason Bodner
A Year to Create Something New and Valuable?

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.