by Jason Bodner
July 8, 2025
“We suffer more in imagination than in reality.” – Seneca, the Roman Philosopher
This insight rings true across the centuries, and it continues to resonate today. People, as a rule, tend to worry about things that never actually happen. Our imaginations are powerful—sometimes too powerful. They can often create elaborate scenarios filled with fear, anxiety, or doubt. These scenarios rarely come to fruition, yet they shape our actions, mood, and decision-making in very real and sometimes costly ways.
That same lens of psychological insight applies to investing. I just heard from my dad, an accomplished investor. Calling him accomplished would be an understatement. Last week, I told you about our first meeting with Louis Navellier in his Reno corporate offices in the early 1990s, since dad wanted to see his operation up close and ask the team about their investing discipline before investing there. As a result of dad’s skills and Louie’s team, he has been living off his investment successes and skills for more than 20-years, managing his nest egg with consistency and focus. His investment accounts have continued to grow and compound handsomely. He’s seen market crashes come and go – booms, bubbles, and bear markets.
With that background, when he asked me a particular question last week, I knew it wasn’t rooted in fear or panic—it came from a place of genuine curiosity, seasoned experience, and rational analysis. He asked:
Dad’s question was simple but profound. Perhaps he was also asking, When is the next shoe going to drop?
It’s a fair question. A lot of people are asking questions like that about now. With markets at all-time highs, geopolitical tensions rising and inflation still being debated, many are nervously watching the skies for signs of storm clouds. My initial short answer to dad’s question was: The shoe will drop when it drops.
The longer answer is more interesting. Basically, while a correction is inevitable at some point, we are not there yet, and it may take some time to get there. All the available data suggest that we are in the midst of a strong bull market. And in times like these, it’s far more dangerous to jump out of the way of a bus that may be 25-miles down the road, just because you fear an accident like one read about in today’s news.
So, let’s examine the data.
To begin with, the Big Money Index (BMI) is still sitting in overbought territory. This indicator measures large institutional buying versus selling and is often a powerful signal of the market’s direction. A rising BMI, even in overbought conditions, suggests sustained interest from big players.
Recently, the BMI drifted down slightly, but last week it began to rise again.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Even more telling, we are witnessing increasing equity inflows—a positive sign that institutional and retail investors alike are putting fresh capital into the market.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
ETF inflows have exploded higher in recent weeks. This surge is significant because ETFs offer a window into broad investor sentiment across sectors, sizes, and styles. When ETF money flows accelerate, that signals growing confidence in the equity market.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
This activity has been accompanied by elevated trading volumes, which have been climbing steadily for several weeks. When volume rises in tandem with prices and inflows, it suggests conviction behind the buying. This combination often precedes a continuation of bullish trends.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Taken together, this could very well be the start—or the continuation—of a blow-off top phase. This is a point in a bull market when enthusiasm turns into euphoric momentum. In such a scenario, investors begin buying not because of rational valuation analysis, but because of Fear of Missing Out (FOMO). However, it’s important to remember that the BMI can remain overbought for an extended period. A prime example:
Following the COVID crash, the market stayed in overbought territory for a remarkable 87-trading days, about four-months. Many tried to call the top prematurely. Those who stayed invested reaped the rewards.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
A better warning trigger is when the BMI falls from overbought accompanied by clear outflow signals. That’s the real caution flag. Until then, history shows that overbought markets can keep running.
One especially bullish signal is the destination of these inflows. Capital isn’t moving randomly, as it usually targets more aggressive high-growth areas. For example, since the day President Trump announced a 90-day tariff delay, 83% of equity inflows have moved into small-cap and mid-cap stocks, which are generally more sensitive to economic optimism and future growth prospects.
When investors favor high-growth sectors, it’s often a sign that they expect strength ahead.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Next, we look at sector rotation. From the market lows on April 8th, we have observed a significant shift in sector leadership. Defensive sectors like Utilities, Staples, and Real Estate—which usually outperform during market stress—have dropped in rank. Real Estate also declined.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Conversely, growth sectors have surged. Technology, Industrials, and Consumer Discretionary have all seen strong upward moves in ranking. These sectors tend to thrive during periods of expansion.
If we drill down further and examine actual sector inflows, the story becomes even more encouraging. Industrials, Financials, Technology, Materials, Communications, and Discretionary stocks are attracting substantial new investment. Virtually none of these sectors are showing meaningful outflows. This tells us that the optimism is broad-based and capital is rotating into sectors closely aligned with economic growth.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
So, where does that leave us?
The market is strong. The underlying data from ETF inflows to trading volume, sector rotation to BMI strength points to continued upward momentum. That doesn’t mean there’s no risk. There always is. But there’s no evidence yet of the kind of deterioration that would suggest the proverbial shoe is about to drop.
Fear and imagination are powerful forces. They’ve misled entire societies, as history shows, with endless examples. They can just as easily mislead investors today. We must anchor ourselves in data, not in ghosts.
As Will Rogers once said, “Don’t let yesterday use up too much of today.”
Let’s take Will Rogers one step further: “Don’t let imagined tomorrows rob you of today’s opportunities.”
All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.
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Which is Right? The Downbeat ADP Jobs Report or Friday’s Bullish Report?
Income Mail by Bryan Perry
Bond Equivalents Should Shine in the Second Half Of 2025
Growth Mail by Gary Alexander
Where is the U.S. Dollar Headed? – And Does it Matter?
Global Mail by Ivan Martchev
The S&P Is Flying High, Like Icarus
Sector Spotlight by Jason Bodner
How Overbought is this Market? (And Does it Matter?)
View Full Archive
Read Past Issues Here
Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT
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 and 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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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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