by Jason Bodner
Mat 12, 2026
Sunlight takes 8-minutes and 20-seconds to reach Earth, as photons cross 93-million miles of vacuum, smash into the atmosphere and create a new morning. Most of us haven’t even had our coffee by then.
Capital in the stock market can move that fast, too. And it just did.
Five weeks ago, the 25-day moving average we call the Big Money Index (BMI) sagged to 41%. The market’s mood was sour, sellers were dominant, outflows were everywhere, and the tape felt like it was bracing for something even worse. Today, the BMI reads 73%. SPY is at all-time highs. The VIX is at 17.
That’s a 32-point climb in the BMI in 25-trading sessions… it feels like a regime change:
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.
This sudden change made me study what happens when the BMI rises from below 45% to above 70% in a 25-session span. Going back to 1990, this has happened 35-prior times. Here’s what the S&P 500 did next:
- 6-months later, the S&P was positive 80% of the time with a median return of +6.7%
- 1-year later, it was positive 85% of the time, with a median return of +13.7%
- 2-years later, it was positive 82% of the time, with a stunning median return of +28.4%
In the 34-prior signals, after one full year, 29 (85%) were higher a year later. Here’s the full data:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
There is no guarantee of a rise this time around, but the five misses make this history interesting. Plotted against three and a half-decades of market history, they cluster in two obvious places:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Here the previous non-performing periods following the “Sharp Recovery Signal,” all quite long ago;
- November 1999 created a rally during the late dot-com euphoria.
- May and November 2001 fired into a recession that was already underway.
- October 2007 and May 2008 fired in the months before Lehman.
Each miss turned out to be a macro shock, overriding the recovery signal. Meanwhile, the same signal fired at the post-GFC bottom in April 2009 and the COVID bottom in April 2020, and the market recovered quickly. When the macro held, the signal worked. When the macro broke, nothing worked.
Translation: the signal is reliable when the macro is stable. Macro is the override. As long as nothing breaks at the system level, the flow data has historically been right roughly 80% of the time.
The headline number is one thing. What’s being bought tells you whether this move has staying power, so let’s look at last week’s action. It turns out Wednesday, May 6 was the broadest day of the entire advance, as 221-stocks saw fresh inflows against just 59-outflows. That kind of breadth usually doesn’t come from panic buying. It shows up when institutions reposition entire portfolios.
Real Estate posted the clearest sector dominance last week, with 39-inflows against just two-outflows. Data-center landlords, hotels, apartments and the like all participated. When REITs lead, it’s classic risk-on behavior. Investors want yield and are willing to lean into cyclical exposure to get it.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Financials were the second-cleanest sector with 67-inflows against 14-outflows. Inside that group, a quiet but important rotation took shape. Bitcoin miners were bought, not because crypto suddenly became cool again, but because their power-heavy infrastructure is being repriced as AI compute capacity. The same megawatts that mine digital coins can train models. Markets figured that out before most headlines did.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Technology delivered the deepest signal, with the most inflows: 205-inflows against just 18-outflows.
Memory and storage names appeared repeatedly. Semiconductor packaging equipment quietly led the persistence table. Optical networking confirmed itself as a major flow theme, with one core-photonics name posting inflows every trading day last week.
The bandwidth bottleneck inside AI data-centers is now very real. This is no longer just a GPU story.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
The most interesting nuance last week came inside the utilities. At first glance, the sector looks weak overall: 15-outflows against five-inflows. But look closer. Names being sold are rate-regulated utilities, while the names being bought are merchant power companies. These are businesses able to strike data-center deals at market rates and directly monetize the surging AI demand.
In short, the market is selling fixed-return power and buying flexible power.
That isn’t just sector rotation. It’s capital anticipating an entirely different demand environment.
OK, What’s Being Sold?
Three patterns dominate the sell list, for the third-straight week.
- IT services and consulting names continue appearing on the outflow list. EPAM Systems posted outflows all four-days. Accenture joined this week as well. The market increasingly views AI as an infrastructure build-out story while implementation services drift toward the disruption bucket.
- Medical devices and diagnostics are also leaking capital. Investors are rotating out of stable health care and into specialty pharma and biotech. That’s a classic risk-on tell even within defensive sectors.
- Consumer staples continue getting sold as well, so money is leaving the safest corners of the market.
In summary, the Sharp Recovery Signal has fired 36-times since 1990. The first year following the event produced an 85% one-year win rate and a median gain of 13.7%. The 36th just arrived. Which direction will we move next? My answer: What’s underneath this move matters as much as the signal itself.
Capital is not buying indiscriminately. It’s choosing merchant power over regulated power, semiconductor equipment over consulting services, AI infrastructure over enterprise software implementation, biotech over defensive healthcare. That discrimination is usually what separates durable advances from reflexes.
The risk remains the same as in every prior Sharp Recovery Signal: Macro is still the ultimate override. If the system breaks at the macro level, the signal breaks with it. Watch the credit spreads. Watch the dollar. Watch oil – three main pressure gauges. Until those start to crack, history says the tape deserves respect.
“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett
Buffett was talking about discipline, not speed, but patience cuts both ways. Fighting one of the strongest momentum thrusts in 36-years because it ‘feels’ over-extended has historically been an expensive exercise.
When the market speaks, history says we should listen.
Navellier & Associates; do not own Accenture Plc Class A. (ACN), or EPAM Systems (EPAM), in managed accounts. Jason Bodner does not own positions in Accenture Plc Class A. (ACN), or EPAM Systems (EPAM).
All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.
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A Look Ahead by Louis Navellier
Job Growth Exceeds Analyst Expectations
Income Mail by Bryan Perry
The Bullish Outlook for U.S. Energy Infrastructure Strengthens
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America is Running Economic Laps Around Europe
Global Mail by Ivan Martchev
Political Considerations Before the Trump-Xi Summit
Sector Spotlight by Jason Bodner
When the Tide Turns This Fast, Pay Attention
View Full Archive
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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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