Articles

By: Chris Rowe — November 5, 2019

Technical Tuesday: Here's Where All the Money's Flowing

Don't listen to what the media says - Just follow the big institutional money and you'll profit like they do.

Chris Rowe Bio 9.1

With strong earnings, more promising economic data and optimism over a possible U.S.-China trade deal, we're seeing new record highs in the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite.

The Nasdaq has been the strongest.

Why?

Because it's loaded with TECH STOCKS.

(Click the lower left arrow to watch video)

 

So that's the sector we want to overweight our portfolio into.

Let's take a step back for a minute to discuss the underlying strength of the equity market.

One sign that the global financial markets are experiencing increasingly bullish sentiment is when Emerging Markets are showing strength.

Emerging markets are considered to be riskier than U.S. stocks so when emerging markets gain strength, investors tend to notice, and the next domino falls.

Screen Shot 2019-11-05 at 10.44.48 AMThe once popular acronym "BRIC", which stood for Brazil, Russia, India, China, comes to mind.

One fund that's great for gauging the strength of the emerging country stock markets is the iShares MSCI Emerging Markets Index ETF (Symbol: EEM).

The fund is most heavily weighted in China, with a 35.36% weighting, followed by Taiwan, India and Brazil, with weightings of 13.7%, 11.8% and 8%, respectively.

In the 3-year chart, below, you can see that the index recently broke above a key resistance level created by the long-term downtrend line.  You can also see a symmetrical triangle formation.

2019-11-05_10-33-51

The minimum price objective here is determined by measuring the base of the triangle and extending that above the breakout point.  The target given is $51.00, which is 21% higher.

So with an implication that emerging markets will jump by 21%, chances are investor sentiment will become a lot more bullish than it is right now.

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"It took me 8 years to convince Bill to go public." ~ Chris Rowe

Don't miss Bill Spencer's "Technology Summit 2020", where he'll call the end of one industry the entire world relies on... 

And how the "Uberization of Everything" is making his investors rich.

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Let's look at a relative strength chart of EEM compared to the S&P 500 index ETF (Symbol: SPY).

2019-11-05_10-32-46

While this looks like a regular stock chart, this is a relative strength chart.  It goes up when EEM is outperforming (going up by more or down by less) SPY.

It has been advancing since August and made a sharp jump just as the U.S. stock market began breaking highs again.

I'm not saying to get out of U.S. stocks and into emerging market stocks.

I'm saying the strength in emerging market stocks indicates that the global financial market is telling you it's in "RISK ON" mode.  You should be too.

Technology stocks are leading the way.

Here's a breakdown of the results of a giant relative strength matrix, created by Nasdaq.

2019-11-05_10-05-13

I won't get too wonky on you here but just to quickly touch on what this is...

They take hundreds of funds, representing various sectors of the market, and dump them all into the same matrix.

Each sector fund is compared to each and every other sector fund in the matrix, one by one.   They do this by creating hundreds of individual relative strength charts like the one I just showed you of EEM compared to SPY.

This is done in order to figure out which groups are showing the most strength.

Basically, when one fund is showing long-term relative strength verses another fund, it scores a point.  Long story short, it creates a point system.

Look at the scores of each of the funds.  The scores make it possible to rank the sectors in terms of relative strength, but we are also able to see exactly how much stronger the technology sector is than all other sectors of the stock market.

2019-11-05_10-05-13

From right to left, starting with the healthcare sector and ending with the industrials sector, you can see the scores trickle up bit by bit.

There's a 60 point difference between the industrials sector (ranked #10/11) and the industrial sector (ranked #2/11).

But then there's a 64 point difference between the technology sector (ranked #1) and the industrials sector (ranked #2).

Mark my words, you will continue to see the stock market push higher in the long-term - a bold statement that nobody but me is willing to make, publicly.  But not all sectors will be strong.

The technology sector is the sector that institutions are buying so much of, that its forcing prices higher to a larger extent than any other sector - by far.

Take a look at the results of a matrix based on a basket of international equity funds.

2019-11-05_12-25-48

This breaks non-U.S. stocks down into six sectors.  The leading sectors are both emerging markets.  Again, another strong indication of risk-on.

There are many reasons why, but out time is better spent on the "what" than the "why".

China is pushing U.S. President Donald Trump to remove more tariffs imposed in September as part of the much touted "phase one" trade deal between the two nations.

We have entered whats seasonally the strongest time of the year for the stock market and we are in the strongest of the 4-year election cycle - the pre-election year. The second strongest year is the election year.

Whether it be that America and China are inching toward a trade deal, seasonality, or a bunch of other bullish indicators that I'll share with my Sector Focus readers, the market wants to go higher.

So look at the upcoming natural price-dips as buying opportunities.  And you want to focus heavily on technology.

Chris Rowe

Founder, True Market Insiders

PS:  On November 12th, at the "Technology Crossroads 2020 Summit", for the first time EVER, our editor-in-chief, Bill Spencer will start going public with the same information he uses to make his own investment decisions.

Bill is one of the most well connected and sought after investors in the business and if you pay close attention, you'll quickly understand why.  The man has a reputation for "kicking down doors" to get the information he needs.

Even if you can't make the event, sign up because Bill is sending people updates leading up to the event that you'll want to get your hands on.

It took me EIGHT YEARS to convince this man to do something like this and he never wanted to be a public figure... he never wanted to be "that guy"... he always wanted to retain his private life.  But in July, I convinced him to write small-cap Saturdays for you, where his published trade ideas have been outpacing the S&P 500 by a multiple of six.

And then I asked him to make public the way he darts around the world to personally investigate companies he invests in so that you can get a glimpse of how hard-core this guy is.  I've never met anyone like him and I'm more excited than ever to see what he reveals on November 12th.

Bill Spencer has given me 13 stock recommendations for myself, over the last year or so.  All of them have gone higher - most have gone significantly higher. And since his favorite sector is the strongest of them all (Technology) in a market that's a screaming long-term buy... the stars are aligned perfectly for you to leverage what he has to offer.

Take a look, here.

Chris Rowe Bio 9.1

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