by Jason Bodner

August 11, 2020

Remember when America launched nukes into space, just to see what would happen?

Or when the U.S. government lost $21 trillion?

Let’s start with the nuke… On July 9, 1962, Operation Starfish Prime saw the United States launch a nuclear bomb 900 miles west-southwest of Hawaii and detonate it 250 miles above earth. The 1.4 megaton blast was roughly 100-times more powerful than the Hiroshima blast.

Nuclear Bomb

Who paid? Naturally, taxpayers did. Every hard-working American funds a cornucopia of crazy shenanigans in dark corridors of the world. The U.S. government continues to research all sorts of off-the-wall operations like dark-ops, psychic communications, paranormal activities, and even UFOs.

Which bring us to the missing money. On September 10, 2001 – the day before you-know-what – U.S. Defense Secretary Donald Rumsfeld disclosed that he couldn’t account for about $2.3 trillion. The next day, the 9/11 terrorist attacks changed our focus, and Rumsfeld’s shocker was forgotten by the public.

Economics Professor Mark Skidmore at Michigan State University combed through public data and found the situation was about 10 times worse. He could find $21 trillion in missing money in the Defense and Housing and Urban Development departments between 1998 and 2015.

But the point here is: Major stuff happens right in front of us that we are not aware of.  

This is especially true in the stock market. The media is rigged to keep us plugged into their channel under the guise of keeping us “informed.” CNBC makes it seem like you and I, the everyday traders, are responsible for daily price moves. While that may be true on any given day, the big moves over time happen from another place: Big money. 70-90% of all daily stock trading volume is institutional. If you’re not focused on where the big money goes, you’re just blissfully unaware of what really moves markets.

I know I beat up on the news media a lot, but their business model is one of entertainment, to keep you watching, in order to earn revenue from ad sales. They make money when you’re tuned in so the companies making the annoying commercials will pay them. It’s that simple. If they let you figure out all the answers on your own, you won’t watch and the advertisers won’t pay, so they have to keep enough hundreds of thousands of viewers on a hamster wheel. That’s why every day it’s a new story.

Some days the talking heads are mostly bulls; other days they’re bears. Stocks that were hated yesterday are loved today. Getting your guidance from mainstream financial news media can feel like you had two chili dogs and just got off the merry-go-round.

Big Money Focuses on “Outlier” Stocks

It’s the big money that moves markets. And the key to making big money is to watch when they buy outlier stocks. By outliers, I’m referring to the 4% of stocks that account for all net stock market gains (above Treasuries) since 1926). The formula is simple: follow big money buying the best stocks.

We start by looking at whether the big money is moving in or out of the stock market. It’s no secret that February and March found massive outflows. But when the market bottomed and my data said “oversold” conditions couldn’t last, bullish sentiment was scarce. I called for a bottom around March 20th and it came one trading day later on Monday, March 23rd. Since then the markets have skyrocketed.

Index Mar232020

The Big Money Index (BMI) measures all big buying and selling, using a 25-day moving average. It helps us identify overbought and oversold markets. This is what allowed me to call a bottom in March. Overbought conditions however are trickier. Keynes said, “Markets can stay irrational longer than you can stay solvent.” And we now enter the record-longest period of overbought in 30 years, beating the mid-1990s (65 days). This is why I don’t try to predict outcomes, only “surf the wave” and prepare for turns.


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

Next, to narrow down where the money goes, we look for which sectors collect capital. While all sectors got bought, some are clear winners from the bottom. Tech, Discretionary, and Materials stocks have benefitted the most from the big bounce – which everyone is wondering, “Will it ever end?”

Sectors Mar232020Rev1

We look at big money buy and sell signals on a weekly basis to get an accurate view of which actual stocks they are buying or selling. This is also split into sectors. We can see clearly that sellers are scarce. Tech, Staples, Materials, Discretionary, Industrials, Healthcare, and Communications all collected cash last week. The buying frenzy continues.

Map Signals Sector RankingsRev

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

What “Outliers” Look Like

The final piece of the big money puzzle is knowing the best stocks getting the most money. Discussing individual stocks is beyond the scope of this article, but the formula remains simple. One must focus on stocks with great sales and earnings growth, healthy profits, low debt, and unique businesses positioned well for future continued growth. It helps to use an example of stocks like PayPal, which I own.

Navellier & Associates owns PayPal in managed accounts.   Jason Bodner does own PayPal in a personal account.

Outliers look like this:

PayPal Holdings Inc

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

Making money in stocks is really not that complicated. It’s just that the secret lies out of reach of most investors, just beneath the surface. The powers that be prefer it that way, just like whoever is benefitting from your missing $21 trillion. Do they want you to find out where (and to whom?) it is going? No!

Look: Our visible universe; stars, galaxies, planets, and everything we can see, accounts for only 4% the mass-energy of the universe. The other 96% is stuff we can’t see but we know is there. Other than that- we know very little, but odds are that other 96% exerts most of the influence.

It sounds a lot like the stock market. We all imagine a world of honesty and transparency, but that’s a myth. Why? Mark Twain had the perfect answer: “Honesty is the best policy – when there is money in it.”

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
Fitch Downgrades U.S. Credit Outlook

Income Mail by Bryan Perry
Retail REITs Getting Ready to Rumble?

Growth Mail by Gary Alexander
Comparing the Continents Fairly: America vs. Europe vs. Asia

Global Mail by Ivan Martchev
The Dollar Short Squeeze is Not Over Yet

Sector Spotlight by Jason Bodner
Big-Game Hunting for “Outlier” Stocks

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

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