by Jason Bodner

May 17, 2022

I was just in Las Vegas, presenting my data and views at The Money Show, where I kept getting the same question (the one in this headline): “When will the selling end?”

Ironically, the presentation I was giving there contained the answer to this very question. I spoke on the same subject I raise here most weeks – starting with The Big Money Index and its near-term implications. So, today, I’ll provide the answer I gave them, based on data, science, and historical similarities to today.

As I spoke, market volatility was at feverish levels – big up days and bigger down days. Growth and tech shares have dominated the selling since as far back as November. By now, it appears that everything is on sale, including large-cap tech and other prior winning groups. It appears that nothing is safe now.

There is panic selling, fueled by the unwinding of leverage and crowded trades. Selling is being amplified by high frequency traders and algorithmic traders. And it seems like there’s no end in sight, but is that so?

Let’s start with NASDAQ. A Bespoke Investment Group research report I read said this is the 9th time in NASDAQ history that the index has fallen 25% or more. As of the report’s publication date (Monday, May 9), NASDAQ was down over 27% since it’s November peak. The average time it took to fall 25% or more was 161 days. Through May 9, it took 171 days – longer than average. Once it fell 25%, it took a total of 209 days (on average) to put in an ultimate low. And the average low was 40% from its peak. This data goes back to the 1970s. That’s the bad news: History says we may have more downside, near-term.

The good news is that the forward returns after the index fell 25% are awesome:

  • Next three months +11%
  • Six months +20.4%
  • 12 months +33.5%

Naturally, returns varied for each period, but this metric says we are approaching grossly oversold levels, and these recovery averages tell me that NASDAQ tends to be super-bullish on the rebound.

What interests me even more is what I presented at the Money Show. The Big Money Index is essentially a gauge for big money flows in stocks. It works like this: I take all the unusually large volume buy and sell signals and plot a 25-day moving average. This gives me a smooth indication of whether big money is moving in or out of the market. Currently, it is in freefall. Last Thursday, it hit 31.2%, the lowest since the pandemic began. This is interesting because a BMI reading of 25% or below is “deeply oversold,” a rare occurrence; It only happened six times since 2014. And each time it was extremely bullish for stocks.

Big Money Index Chart

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

Looking further back – at BMI data since 1990 – this has happened only 20 times, an average of once every 19 months. There were only 410 days spent oversold out of roughly 8,150 trading days – just 5% of all days. The last time we saw a BMI oversold reading was March 2020, during the deepest Covid lows.

Here’s where it gets interesting… The average duration of an oversold reading since 1990 is 20 trading days, just under a month. The average time until trough after the initial oversold reading was 9.5 trading days. Similar to NASDAQ data above, the S&P 500 forward returns from the first oversold reading were:

MapSignals Table

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

As you can see, this rare oversold reading is historically very bullish for stocks, on average. An oversold BMI is a battle cry to buy beaten-down stocks. And we’re about to plunge below oversold, which is why I can tell you when I believe the market will trough. Perhaps you recall that I wrote about the last times this happened. In fact, I alerted my readers to these times in October and December of 2018 and March 2020.

Based on these past oversold conditions, I predict the oversold and bottom (as of Thursday, May 12):

  • The earliest we go oversold is Tuesday, May 17, assuming zero buying until then. That, my friends, is today. That means there’s a strong likelihood of an oversold BMI this week.
  • Using BMI data since 1990 – the market could trough as early as June 1, if averages hold.

The bad news is that there’s potentially more downward volatility until sellers exhaust themselves. The good news is that an oversold reading means stocks are grossly oversold, and this is very bullish.

Ask for our game plan: Much like a hurricane warning, we must just sit through the storm until it passes. Succumbing to fear during forced selling would be a grave mistake, in my view. (By forced selling, I mean that some portfolio managers are forced to sell positions due to leverage.) Oftentimes traders employ leverage. For example:  pledging one dollar of collateral can control three dollars of risk.

Leverage is used when market returns are strong. For instance, the S&P 500 rose a lot in recent years:

  • In 2019, the S&P 500 was up 28.9%
  • In 2020, it was up another 16.3%
  • In 2021, the S&P was up 26.9%

Those returns were great, but they are professional money managers like to beat their peers, which is hard to do without using leverage, so many used 3x leverage to turn 25% market gains into 75% gains. This kind of leverage can work wonders on the way up. But through last Thursday, the S&P was down 17.5% in 2022. Imagine risking three times your capital and experiencing a drawdown of 53% in this example. Leverage can be even higher than 3x, which can totally wipe out your principle and force liquidation.

As you can see, sellers are getting close to exhausting themselves. Soon there will be few (if any) sellers left, and that’s when the bargain hunters will step in to lift beaten down stocks, so here’s our strategy:

  • Conservative investors looking for safety should start to identify profitable large-cap companies with strong balance sheets and low debt. Ideally, these companies have low P/E ratios and pay a dividend. Stocks like these will likely see capital appreciation over the coming years as well as earning a dividend yield to help offset vicious inflation.
  • More aggressive investors should identify heavily beaten-down areas like technology. The demand for technology globally will only continue to grow. Our reliance on technology for everything from communications, computing, networking, cloud, driving, and even washing our dishes is not suddenly going to stop because we are worried about inflation and interest rates.

As I write this on May 12, tons of alerts are hitting my phone of stocks I own hitting new 52-week lows.

Does it stink? Yes.

Am I nervous? No.

Am I selling? Absolutely not. In fact, I am getting together my shopping list for pummeled stocks I want to buy at bargain basement prices. And now we have the playbook for the likely timing of when to act.

That time is coming very soon, perhaps by month’s end.

I know this volatility is unsettling, uncomfortable, and even painful to endure, but deals in stocks never resemble deals in the corner store in everyday life. We get excited when an expensive TV we want suddenly goes on sale. But when it comes to our investments, we feel bad because we worry about losing money. Still, it’s in times like this that long-term investors can lock-in serious returns for their future.

Bottom line, the Big Money Index looks set to become oversold as soon as this week (May 15-19).

Our question shouldn’t be “What will I be selling?” but “What will I be buying?”

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
Stock Market Headed Between Scylla and Charybdis

Sector Spotlight by Jason Bodner
When Will the Selling End?

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:

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.