I’ve learned to never get surprised at market action, states Lucas Downey of Mapsignals.com.
Right when consensus decides that a sector is set for doom, value hunters pounce. New uptrends emerge. That’s how markets work! Today, we’ll cover the changing sector tides and zero in on new signs of life. One look at our data and you’ll see that investors are betting on Technology stocks.
Going against consensus won’t win you a popularity contest on Wall Street. No doubt, betting on a rebound in stocks has been challenging for nearly all of 2022. That said, there were plenty of tradable bottoms and frothy tops to play with. However, heading into the New Year our message was simple: Stocks can be a good bet in 2023. Thus far, the call has been right as the S&P 500 is +4.69% YTD. A sour appetite for stocks has sent prior unloved equities surging.
With a new year comes new leadership and notable data insights. Oh, how quickly things change. Speaking of change, you’ll notice a new look at our charts today. We’re updating the look of our portal soon. Today’s a sneak peek, so let us know what you think! Let’s dive in.
Investors are Betting on Technology Stocks
Money is flowing into markets again. It’s easy to see that with the Big Money Index (BMI). This indicator measures unusual buying and selling in stocks, plotting an easy-to-follow trend. This morning the reading is at 63% and it’s set to rise in the coming weeks:
Those green arrows notate how a rising BMI typically means there’s heavy demand for stocks. Markets usually follow the BMI’s lead. Why is the BMI rising? One look at the daily buy and sell action, and you’ll see why. Since November tenth, three out of four stock signals were on the buy side. That’s telling you market internals are vastly improving:
That’s a trend you don’t want to fight. As long as the money’s flowing into stocks, prices are set to rise. Diving deeper, the last 2 weeks reveal that most of the buying is in Technology stocks. Since January 12, investors are betting on technology stocks with 19% of the inflows:
When there’s a huge bid for Technology stocks, you can bet there are many outperformers. Inside our portal, we list the top-ranked stocks by sector each morning. Here’s a look at the top 7 names as of today with tickers and names blurred out. Many of the top performers are in the software and semiconductor industries. Off to the right, you’ll see the return of each of them since being profiled:
Each of them is up double digits in short order. Three tickers are up 45% or more. That’s risk-on-action if you ask me. Finally, more proof that investors are betting on Technology stocks can be seen in pure price performance from the lows. The NASDAQ 100 made a recent trough on November third, 2022—which notably was days before the big buying started in our data.
Here are the top 25 performing stocks in the NASDAQ 100 since 11/3/2022:
That’s a lot of green and a powerful trend! Stocks are re-rating and fast. Last year’s pain has become this year’s gain..so far. Let’s wrap up.
Here’s the Bottom Line
Investors are betting on Technology stocks in a big way. Not only are sector flows gaining, but Tech is one of the main reasons the BMI is ripping right now. That means there’s an upside opportunity for stock pickers. 2023 might indeed shape up to be a much better year for markets than 2022. Odds are, it will.
Just follow the Big Money and focus on superior stocks. Remember, the trend of buying has been in place for some time. Often the best moments to go shopping are when markets are on sale. Be methodical and pick your spots. Earnings season is a great time to do your homework and research new opportunities.
To learn more about Lucas Downey, visit Mapsignals.com.
