A month ago, stocks crashed. Pundits claimed equities were “uninvestable.” Instead, the unthinkable happened. Now, mid-caps should rip, notes Lucas Downey, co-founder of MAPSignals.
Brand new leadership and a mid-cap surge has emerged, and this breath-taking rally has legs to run. Consider this: Estimates suggest that 80% of forest fires are human-caused. What’s important is what occurs once the flames burn out. Nature eventually heals. Out of the ashes springs new life.
Did you know that 100% of stock market fires are caused by humans? It’s true. Tariffs ignited the latest blaze. But as we’ve witnessed time and time again, money is quickly put to work and new leadership emerges from the equity embers.
Fortunately, money flows help us spot this cyclical pattern. Over the past month, our flow data reveals a monster appetite for company-specific mid-caps. Below are plots for all equity flows in the last month, broken out by market cap. Only one area has experienced net inflows.
Stocks with market caps of $5 billion to $300 billion have experienced 306 buys (inflows) compared to 175 sells (outflows). Keep in mind these are discrete companies. Clearly, there is a rush of money flowing into under-the-radar stocks.
