2023 seems to be the most hated bull market in years. That’s what happens when the crowd is offside and overly bearish, states Lucas Downey of Mapsignals.com.
This is exactly the type of environment where MAPsignals shines: Spotting mega-trending stocks. I’ll be frank, many stocks are under healthy accumulation. While this flies in the face of distracting narratives in the media, institutional footprints tell the real story. Money is being put to work in select companies.
Today, we’ll glance over the Big Money landscape, spotting the trend. Then we’ll isolate one story stock pressing higher with outsized buy signals. We’ll cover the opposite too, a heavily sold stock. These insights showcase the dichotomy in the market today. Winners keep winning while laggards keep falling.
Spotting Mega-Trending Stocks
Money trends in markets are important. They reveal the true appetite for risk. Currently, we’re in a quiet zone for stocks as inflows pair off against outflows. This is the reason markets have been range-bound for over a month. The below Big Money Stock Buys and Sells chart shows this eloquently. Since April, the S&P 500 (SPY) has been choppy as the tug-of-war under the surface continues:
To the untrained eye, this chart may appear as a lack of opportunity in stocks. But nothing could be further from the truth! What isn’t shown in those green and red bars are powerful trending stocks. This is where having a process is key! Not only do we look at overall flows for macro trends, but we also rank equities based on forward fundamental qualities like expected earnings growth, sales growth, and more.
When you isolate the best power stocks getting bought, mega-trends emerge. This is where the magic happens. Each week we cull all of our buy and sell signals, score them, and clip off the tails. This process displays a powerful Top 20 list showcasing the highest quality stocks likely getting bought by institutional investors.
Why do we do this? After spending years on bank trading desks, we learned Big Money players' impact on stocks. There are repeated supply and demand trends offering big opportunities. When the crowd is bearish, monster-sized trends emerge. This week’s report highlights this beautifully.
Below, is a blurred version of this week’s report. It’s divided into two sections. The top outlines the 20 highest-ranking stocks under accumulation, while the bottom lists the ten lowest-ranking names. You’ll notice right off the bat how the top 20 stocks tend to show positive performance after making this list. The bottom ten stocks tend to head the other way: down. This report is designed for one objective: spotting mega-trending stocks. I’ve also circled one top-performing stock from the report, Super Micro Computer (SMCI), and one weak performer Enviva (EVA):
Let’s now plot these two names with a chart. From the top, Super Micro Computer first saw a Top 20 appearance in late April after unusual buy signals were triggered. The repeating blue bars indicate continual inflows in the name. That’s the key trait of winning stocks. The latest surge in price last week came after the company blew away next quarter’s EPS estimates. The firm expects to earn $2.21 – $2.71 in Q4 vs estimates of $1.76. That sent the stock flying. BOOM!
Conversely, the Bottom ten list is littered with companies with the opposite attributes. Take Enviva Partners LP as an example. Enviva has seen only outflows all year and scores poorly on fundamentals. Since its first appearance in March, the stock has fallen 75%. The latest drawdown came after the firm suspended its dividend and updated its capital allocation priorities:
Does it pay to follow Big Money footprints? You bet it does. As I highlighted last week, expect market heaviness in May and beyond, but focus on outlier stocks. Let institutional trends be your guiding light. Let’s wrap up.
Here’s the bottom line: The range-bound market may appear as a zero-opportunity playground. It isn’t. Our data is thriving, spotting mega-trending stocks. Focus less on media headlines and more on money flows. The latter tells the real story of the market. As I’ve said repeatedly this year, there’s a healthy bull market under the surface. Many under-the-radar growth names are powering higher week after week. It’s really as simple as these four words: Follow the Big Money!
To learn more about Lucas Downey, visit Mapsignals.com.