Right now, the market reminds me of a used car speeding down a highway.

From the outside, the car looks like it’s handling great. It’s tearing up the road, and there’s no sign it’ll have to slow down anytime soon.

But if you take a look under the hood, there’s plenty of trouble brewing…

The market is acting the same way. It’s chugging higher every day… but take a closer look, and you’ll realize the “check engine” light is flashing.

Below, I’ll explain why the market’s joyride is about to end soon… and how you should prepare to handle what comes next…

A Closer Look Under the Hood

By now, it seems like the market has gone up every day. Despite the crash in March, the S&P 500 has recovered its losses, and the Nasdaq is up 16% year-to-date.

But can it keep up this pace?

If we take a closer look at the big-money activity in the market, we get a clearer picture of what’s going on under the hood…

Regular readers know that my Big Money Index (BMI) scans nearly 5,500 stocks each day, using algorithms to rank each one for strength. It also looks at the big money’s buying and selling movements in the broad market as well.

And right now, the data says the big money is trending down…


Now, when the BMI 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.

Since June 22, the big money has been slowing. Our data is picking up fewer and fewer buy signals. Which means we should expect a pullback in stocks around the corner.

Now, I’ve been calling for a pullback for nearly a month now. Yet the market continues to roar higher…

So I dug deeper into our data. And it shows the current overbought conditions have lasted almost 10 weeks so far. The longest we’ve observed similar conditions in the past is 13 weeks.

So don’t be surprised if buying temporarily ramps up again. But when my system indicates buying is drying up – like it is now – the stage is set for sellers to easily push stocks back down.

Look, we don’t have a crystal ball. And our goal isn’t to get the timing exact on a pullback… What we want to do is position ourselves ahead of the next big move. That’s the key to profiting in the markets.

Big-money buying is slowing down across the board. The car may still be speeding, but on the inside, the check engine light is flashing.

This can’t go on forever.

So I’d encourage you to stay on the sidelines for now and ride out any winners you have. It’s likely a pullback is imminent, so wait for better buying opportunities down the road.

Patience and process!

Jason Bodner
Editor, Palm Beach Insider