By: Chris Rowe — November 10, 2020
BUY the ____ out of this market, like now.
Forget what your advisor says.
Forget what your e-letter writer and your webinar investing guru says.
Please forget what CNBC says.
This week, and for a full week, you get to take a sneak peek at the winning lottery numbers. Just watch what the market does this week and take note of what it did yesterday. It basically spells out what to expect for years to come.
"Mr. Market" tips his hand and lets you glance at his cards once every 4 years.
You get a major advantage over the billionaires, the enormous fund managers, the Wall Streets old "boys club".
This week, you get to use their size against them.
Yesterday was the first full trading day after the election results are (kind of) in.
Yes, I know it's not over yet and all of that... but that's a discussion for another time - Let's stay focused on stock market profits.
We can easily see how the institutional investors reacted to Biden's getting elected president by looking at a few key indicators.
The sectors that were the strongest yesterday are the ones likely to stay strong for at least a couple of years, or more.
People are all jacked up, caught up in the hype and worried they'll miss something. There's plenty of time.
COOL YOUR HEELS.
There was no need to go crazy throughout the day.
The most important price of the day is the closing price - that's what's most telling about what institutional investors believe, and are therefore going to continue doing, for the foreseeable future.
Secondly, the closing price at the end of the week, FRIDAY, will tell us almost all that we need to know to make big market profits for years to come.
Let's dive into it.
Stare at this 35-year chart of the S&P 500.
The green arrows point to each election day. Notice how the stock market roared higher almost immediately after all but one presidential election (the 2000 tech-bubble top).
The market just hates uncertainty and once election results are virtually in, its GO TIME.
Now, instead of looking at what 99.9999% of investors are looking at for guidance, let me show you how real players profit from this once every 4-year event...
Does this mean anything to you?
People who understand the Sector Prophets platform just said "WOW!"
It's the picture that pops up in my mind whenever someone asks me what the stock market is doing.
This is a beautiful picture.
Before even identifying which sectors will be the biggest winners, what we can see is the stock market is almost certainly going to continue with strong gains to the upside over the next several months, at least.
This chart is telling you that every single part of the U.S. stock market is now in demand.
This is as "BUY THIS FRIGGIN' MARKET, NOW" as it gets.
To simplify it, the whole thing is blue (except for one red box that speaks to the Asian stock markets).
Blue means demand is in control, and every one of the 41 U.S. sub-sectors (industry groups) are seeing strong demand in their stocks, generally speaking.
You see, this "sector bell curve" shows the 41 sub-sectors that the stock market is comprised of as well as 4 general international markets (including Asia).
More specifically, each of the 41 sub-sectors has its own "Bullish Percent Index" (BPI), which is the granddaddy of all technical indicators.
And when any sector's BPI moves up in a very significant way, long story short, the sector's box turns blue. It's a clear signal that large investors are buying that sector.
With yesterday's price action, they all turned blue. This change is not an easy achievement for a group of stocks to make. The fact that they're ALL blue speaks volumes.
It means that ALL SECTORS have a huge percentage of stock prices that are breaking above past resistance levels, which can ONLY happen with a massive amount of institutional buying.
Most institutional investors won't trade for a couple of percentage points. They have too much money, so they make long-term commitments. And I assure you they have a lot more money to spend (which will keep pushing these stocks higher for a long time).
So it's GAME-ON.
This tool tells us more than any chart of a major market average, which is what everyone else is looking at.
Given what I've explained to you, don't you feel like you know a lot more than you did when you looked at a chart of the general stock market?
I mean what does that even mean?
Here is Your 4-Year "Crystal Ball"
The sector bell curve image tells us everything we need to know. My team and I are pumped because of what it's saying.
Emotional investing is a killer. Avoid it at all costs.
I'm sure people are emotionally wrapped up in the political story.
The natural emotion is to trick yourself into believing "the myth of missed opportunity".
Never forget the 3 keys to money management:
- Risk Management
- Market Timing
In terms of importance, "market timing" takes a very far third place, behind the first two. You don't have to get market timing right. There's an easier way to win, big-time.
Allocation is your decision on where you decide to invest your money. And institutions are telling you which sectors to be invested in, based on which sectors they're buying so much of that those sectors are outperforming.
You may have missed the 5%-10% move in your favorite stock yesterday but if you had been in that position, you'd be in it with very little information. Today, we have nearly all the information.
You have plenty of meat on the bone.
We have the signals that tell us which sectors are likely to trade up 10% and which are likely to trade up 150%.
Sector investing is the easiest game in town.
If you think sector ETFs are not as fun to trade as stocks, consider the solar energy sector fund (Symbol: TAN) is up 167% in a year while the S&P 500 gained 14%.
Institutional investors are the big money players that move markets. I'm actually an institutional investors. They have too much money to invest so they buy entire sectors and they spread their money around by doing so.
It takes them months or sometimes years to finish buying their position.
Those using sector rotation and relative strength make loads of money just by following sectors, and riding the coat tails of the large fund managers.
We've established that the sector bell curve says demand is in control of ALL sectors. So how do we know which ones are likely to advance by 12% and which ones are likely to advance by 120%?
RELATIVE STRENGTH ALERTS
The concept is easy but it's too much to explain here. I'll summarize it by saying when one security (like a solar energy sector ETF) is going up by more or down by less than the stock market (like the S&P 500), it's said to be showing strong "sector relative strength".
Just as absolute prices do trend, relative price performance also trends. That means if a sector (like solar energy) starts to outperform the stock market (showing strong "sector relative strength") it's likely to continue doing so for a long time.
You can track relative performance of sectors yourself or use a service to do it. That's the key to investing.
My platform, Sector Prophets, gave us "Sector Relative Strength" Alerts to get in the solar energy sector (specifically the solar energy sector ETF: "TAN") on June 11th and out of the sector on October 9th.
You may have noticed the green and the red arrow in the comparative performance chart, above (scroll up to check it out!)
So we use relative strength studies to tell us WHERE we want to invest and we use that sector bell curve to tell us WHEN the best time to own it is.
You're going to have a hard time believing this, but it gets even better.
I just told you that we want to be invested in sectors that are outperforming the general stock market. But that only narrows it down to 16 sectors. That's right - only 16 sectors out of the 41 sectors that make up the stock market are showing strong "sector relative strength".
That means 25 of them are sectors that we wouldn't want to invest in and that are likely to not do well for the next several years, relative to the stock market. They might go up, but considering the risk you're taking, you want to be in the ones that will show the largest gains.
Here's why it gets better...
You have 16 sectors showing positive relative strength - so now what?
Great news! We also compare each sector to each and every other sector and create a ranking system.
Okay so now I'm "giving away the farm". And I know it's a lot to take in, for someone who's used to looking at the Dow Jones for market guidance.
But this is the real way to find the strongest stocks and groups. And remember: 80% of the reason any stock does what it does is the behavior of the sector it's in.
To make this super easy for you, we actually look for five key criteria that are statistically proven to be the characteristics of the markets biggest winners.
And only nine sectors fit all of the criteria.
So I've decided to share them with you, in order of current price strength.
- Steel Iron
- Autos & Parts
- Savings & Loans
- Machinery & Tools
- Alternative Energy
- Wall Street
Keep in mind, trends in relative strength tend to continue just like a stock's absolute price trends.
Sector Prophets users will have even more data at the end of the week, after the market closes. This will guide us to stock market profits for the next several years.
And again, we do it every four years.
Don't miss out on this once in an election cycle opportunity!
Think of all the money you'll save by avoiding mistakes.
Founder, True Market Insiders