By now, we all know that the market is often irrational…
Since the market’s bottom in March, the S&P 500 has risen 50%. Meanwhile, the pandemic is still wreaking havoc on the economy. The economic numbers for this past quarter were abysmal, as GDP fell at an annualized rate of 33%. And we’re still seeing too many new COVID-19 cases in many states.
It can be frustrating as an investor, especially if you sold a lot of your positions in March or April to prepare for the inevitable second dip – which hasn’t come. It’s left a lot of investors shaking their heads, wishing they’d bought more or held on.
Here’s the thing: Rather than worry about what the broad market is doing, I focus on a handful of stocks called “outliers.” These are the kinds of companies that always rise over the long term, regardless of what’s going on in the general market.
Only about 4% of stocks fall into this category. But according to one study, over the past 100 years, they’ve made up nearly all of the gains in the market. So if you’re not buying these stocks, you’re wasting your time.
So how do we find them? Below, I’ll show you how I track them down… along with where they can be found today…
Follow the Money
If you want to find outlier stocks, you have to follow the big money.
During my nearly two decades on Wall Street, I became familiar with the big-money buyers. And I quickly learned that they fueled the big moves in the market – and in certain stocks.
That’s why I created my “unbeatable” stock-picking system to clue us in to their next moves.
It scans nearly 5,500 stocks each day. And it uses algorithms to rank each one for strength.
But my system does more than just look at individual stocks. It also looks at the big-money buying and selling in the broad market through the Big-Money Index (BMI).
Here’s what the data is telling us right now:
Now, when the index level dips to 25% (the green line in the chart) or lower, sellers have taken the reins, leading the markets into oversold territory. And when it hits 80% (the red line) or more, it means buyers are in control and markets are overbought.
As you can see, we’ve been overbought for 69 trading days. That beats the record for the longest overbought period since I started tracking this data about 30 years ago. The old record was 65.
So the big money has its foot on the gas. It’s not leaving anytime soon. Which means for the short term, stocks will continue to go up, whether or not it makes sense.
And if we look more closely at the data, we can find where the outliers are lurking…
Urgent Announcement Coming
These big-money buyers target outlier stocks in sectors that outpace the rest of the market. But they buy shares slowly over time to hide their moves.
As they buy more and more every day, the stock can take off. I call it the “billionaire bump.”
So I realized that if investors follow the big money’s lead, they can get in before the “billionaire bump” sends them higher.
And my system can prepare us for the next billionaire bump.
Right now, it says big money is heading into health care and tech stocks.
Take a look at the chart below of Invesco QQQ (QQQ)…
The index tracks the tech and health care industries. And since my system flashed green on QQQ in April, it’s up 50%. That’s the power of big-money buying.
Remember, we let the big money lead us to profits. And right now, it’s still flowing into these two sectors. So if you want broad exposure to this trend, consider QQQ.
But if you really want to juice your gains, you need to find specific outlier stocks poised to get a billionaire bump. And my research shows these huge bumps happen at certain times of the year.
You see, any day now, a billionaire will make a major announcement and reveal the stock he’s been quietly buying. And it’ll lead to a feeding frenzy.
This phenomenon is guaranteed to happen… And when it does, it’ll send certain stocks soaring 10x, 100x, even 1,000x.
Patience and process!
Editor, Palm Beach Insider