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When the Bottom Falls Out

Fear is swirling.

Equities are under pressure.

When the bottom falls out of the Big Money Index, a huge opportunity is around the corner.

Wow. What a difference a week makes. We’re finally witnessing a pullback that most thought was impossible. The overarching bullish sentiment seemed to never stop.

That is, until recently. A cocktail of investor worries are weighing on stocks:

Interest rates are surging. The 10Y yield broke above 4.60%, a level last seen in November
Geopolitical uncertainty is increasing with Middle East attacks
And the threat of rates remaining higher for longer has traders betting that interest rate cuts will get delayed, possibly into 2025

While I could opine on each of these macro worries, today we’ll focus on MAPsignals bread and butter: Money flows.

Right now, there’s a dramatic shift in our data. In fact, we’re observing a rare BMI dump that’s only occurred a few times in recent history.

When investors stop buying stocks, there’s nowhere for prices to go but lower.

Today, we’re going to size up the new data landscape, then we’ll look to history for clues on what’s ahead.

Expect a dip before a monster rip.

When the Bottom Falls Out of the Big Money Index

It’s always good to rewind the tape. Nearly 6 weeks ago, I noted how our trusty market gauge, the Big Money Index (BMI) was declining.

Preparing our readers for a stock market dump before the pump, was not a popular topic at all at the end of February.

But as we’ve learned time and time again, supply and demand ultimately determines market direction.

When money is flowing into stocks, they rise. When money comes out, they drop.

A falling BMI is our canary in the coal mine, alerting us that all is not well under the surface of the market.

While the BMI can be early and delayed, it won’t be denied. This past week saw one of the largest drops in the BMI ever:

Over the past 4 trading days, the BMI fell from 69% to 57.1% this morning. That’s a monumental collapse of 11.9%.

When the bottom falls out of the Big Money Index, it can only mean that buyers have gone on strike and sellers are taking over.

Below reveals this beautifully. The last few days reveal the least amount of buying in 2024. Also to note is we’re witnessing the most selling since October:

While the selloff is well underway and a lot of destruction has already taken place, it’s important to note where the outflows are occurring.

Interest rate sensitive groups like Real Estate, Biotech, and Clean Energy are the pain points. As global rates surge, these capital-intensive groups have suffered.

Does that mean the coast is clear? NO

As I mentioned to our members on Monday, we have yet to see leadership quality stocks get sold. In other words, this selloff is lacking one element to give us a strong “buy the dip” signal: Capitulation.

Capitulation is broad-based selling that hits all areas…even the great stocks. Those golden hour moments typically create an excellent time to shop for value opportunities.

Based on history, we are likely to see a bit more downside before a monster rally.

Check this out. Going back to 2014, I isolated all similar free-falling BMI periods that did not see capitulation. I found 15 discrete instances.

In the following 2-weeks, negative average returns were seen in both large and small-cap stocks.

Notably, the S&P 500 and S&P Small Cap 600 each fell 1.3% and 1.7% respectively the following week, indicating capitulation should come soon.

That’s the bad news.

The great news is these quick dips often offer a window of opportunity for the prepared. Three months later the S&P 500 jumps 3.3% and even better small-caps climb 4.1%:

This is why having reliable data is paramount in these trying times.

When the bottom falls out of the Big Money Index, don’t run for the hills. Instead, start prepping your buy list.

Capitulation is likely around the corner. That’ll be the green light that stocks are ready to bounce.

Trying times are buying times.

Let’s wrap up.

Here’s the bottom line: Markets are in a downtrend. Our Big Money Index has collapsed at a rate rarely seen in the last 10 years.

Whenever we’ve observed similar action, the next 2-weeks are volatile with both large and small-caps in red.

But don’t fret. A monster rally follows 2-months later.

We’re preparing to buy the dip… and ride the rip.

That’s the message we’re telling our members…a recipe that has worked countless times in the past.

We’re waiting for the capitulation signal to fire. Then we’ll go shopping for outlier stocks on sale.

That’s how you win.

Right now is a great time to join MAPsignals if you haven’t already. If you’re a serious investor, money manager or Registered Investment Advisor (RIA), get started with a MAP PRO subscription.

These windows of opportunity rarely come along.

You just need a MAP to guide you.

MAPsignals

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MAPsignals’ volume and price analysis tools enable investors to identify unusually large trading activities around individual stocks and ETFs. This allows traders and investors to move beyond sentiment with a more precise, predictive, and measured data analysis tool that MAPs the signals being delivered by the market’s biggest players.MAPsignals capabilities include: Read more »

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@mapsignalsApril 11

High-Quality Small-Cap Stocks are Thriving in 2024

Most stocks have gone nowhere for months.

The media will have you believe equities are doomed as rates drive higher.

Don’t fall for that story. Under-the-surface reveals plenty of leading companies.

High-quality small-cap stocks are thriving in 2024.

Let’s face it, fear is a powerful emotion. There’s no better place to witness this fight or flight response than in the stock market.

The latest stressor du jour is inflation. After the hotter than expected March CPI dropped 24-hours ago, equities suffered across the board.

The year-over-year inflation reading saw overall prices rise 3.5%…a tad above consensus estimates.

This clearly spooked investors as few stocks were spared yesterday. The S&P 500 fell .95%. Even worse, left for dead small-caps were crushed. The S&P Small Cap 600 crashed 2.94%.

Keep in mind, those paltry returns are measuring popular benchmarks.

The reality is that when you only focus on indexes, you can miss massive opportunities hiding in plain sight.

Today, we’re going to do a data dive looking at the overall state of the market. Our Big Money Index is breaking down to fresh lows.

But that isn’t stopping outlier stocks from racing higher.

Big Money Index Falls to Lowest Reading in 2024

If you want to learn how markets work, study supply and demand mechanics. When buyers are more aggressive, stocks rally.

When sell orders are increasing, equities fall.

The latter is what is causing the Big Money Index (BMI) to make a fresh year-to-date low. I’ve mapped the BMI to the Russell 2000 ($IWM) ETF as the correlation has been uncanny the past year:

Boxed in white shows how stocks are struggling. This gravitational pull on equities has been more pronounced on smaller companies due to recent rising interest rates.

The 10Y yield jumped to 4.55% yesterday, a multi-month high. Notably, there’s been a beautiful inverse relationship between interest rates and small-cap companies.

Below shows an auto-indexed performance of the 10Y yield relative to the S&P Small Cap 600. In late October, yields peaked and stocks began their march higher.

Lately, rates are ripping as small-caps are dipping:

Given the media’s obsession with rising rates recently, you may believe the area is dead money.

But you’d be dead wrong. As I’ve been hinting for nearly a month, a major shift began in mid-March. Brand new leadership was emerging.

Energy stocks vaulted to pole position practically overnight.

I even showcased reasons to believe small-caps will eventually make new highs.

And last week, I noted a very strong case to own Financials.

Those calls were not only grounded in data-driven insights, but more importantly in institutional money flows.

At MAPsignals, we are single stock evangelists. What major benchmarks do is of less relevance. The portfolio we care about is where the money is flowing.

And high-quality small-cap stocks are thriving in 2024 as evidenced by our latest sector rankings. Technology has taken a backseat to new monies rotating into Energy, Industrials, Materials, and Financials:

This new under-the-surface reality reverberates the top names beaming in our data. This is where our unique lens on the market sets us apart from other research shops.

High Quality Small-Cap Stocks are Thriving in 2024

As I said earlier, if you only focus on popular equity benchmarks, you’ll miss the stocks that matter most.

Every day we score and rank thousands of stocks. Additionally, our power signal overlays a reliable unusual buy and sell measurement.

From here, we isolate the tails… the Top 20 ranked stocks under accumulation. This allows us to see an up-to-the-minute reading of money flows.

Given the monumental shift we saw a month ago, here’s where institutions have been placing their bets.

36% of buys went after energy names.
21% vaulted into industrials.
19% poured into financials.

Those 3 groups alone accounted for 76% of our leaderboard since March 19th:

Mapping out money flows reveals market-crushing opportunity. Keep in mind that each of these signals are individual stocks that have idiosyncratic attributes.

In other words, buying a sector ETF to play a theme may not be as relevant due to the basket makeup.

Let’s look at an example industrial stock that we’ve been all over in the past year. If we rewind the tape to early last summer, I made the bold claim that the 2023 bull market is just getting started.

I noted the broadening out of the market happening in our data. Fresh new small-cap stocks were beginning to show up as Big Money magnets.

Take industrial distributor Core & Main (CNM) as a prime example. Strong high-quality inflows were spotted.

Here you can see 13 Top 20 appearances for CNM the past year beginning when the stock was $25 per share. The recent price is $57:

Now, I bring this company to the forefront because we’ve recently been bullish on industrials…specifically the ones under heavy accumulation.

What made Core & Main worthy of being a Top 20 stock?

It came down to accelerating revenue and earnings growth. That’s what drives big investors into stocks at a breakneck pace.

Last June, estimates pegged 2025 EPS at $2.25. Turns out that was too low. As of this morning, the estimate has jumped to $2.42.

If you want to uncover the best stocks in the market, do 2 things:

Focus on stocks where earnings estimates are rising
Zero in on Big Money inflection points – only then is a stock ready to fly higher

So, while small cap indices face headwinds, just know there are plenty under the surface doing just fine.

Playing defense is a great way to underperform over the long-term.

Riding the wave of Big Money in the best stocks is a great way to build wealth over the long-term.

You just need a map to hunt them down.

Let’s wrap up.

Here’s the bottom line: Stock picking is alive and well. While investors flee small-cap benchmarks stressing about inflation, many under-the-radar companies are growing and thriving.

Energy, Financial, and Industrial companies are not only top-ranked…the outliers in the groups have massive Big Money tailwinds.

Core & Main is a prime example of a company beaming with institutional support for over a year. It’s been a name we’ve recommended over and over to our subscribers.

Don’t fear inflation and don’t dwell on rate-cut predictions. You’ll miss the next big winning stock.

Focus on incredible companies that can transform your portfolio.

It’s simple.

Follow the money.

If you’re a serious investor, money manager, or Registered Investment Advisor (RIA) – get started with a MAP PRO subscription.

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MAPsignals

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@mapsignalsApril 10

Members Update 4-10-24 | MAPsignals

Co-founder Jason Bodner shares his outlook on the latest inflation data.

Check it out: https://mapsignals.com/map-blog/members-update-4-10-24/

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Don't have a Login? Put the Power of MAP in your Portfolio with a MAPsignals subscription!

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@mapsignalsApril 10

RIP Bears | STRONG MOMENTUM IS NOT A REASON TO SELL STOCKS

This broadening rally has plenty of gas left for 2024.

Today we’ll show you why recent volatility is a buying opportunity.

3 sectors are set to outperform as this bull market keeps chugging.

https://youtu.be/bgH2FpdqGHk

YouTube

RIP Bears | STRONG MOMENTUM IS NOT A REASON TO SELL STOCKS

#Macro #Stocks #LucasDowney Don’t let that big performance scare you. Strong momentum isn’t a reason to sell stocks: https://mapsignals.com/map-blog/macro-st...

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@mapsignalsApril 8

Keep betting on Elite Financial Stocks in 2024 | XLF Analysis

While much of the media’s focus is on rate cut predictions and why it can sideline stocks, many are missing the critical facts that financial stocks have incredible technical and macro tailwinds this year!

https://youtu.be/016idAd8XG4

YouTube

Keep betting on Elite Financial Stocks in 2024 | XLF Analysis

#Financials #Stocks #LucasDowney Keep betting on elite financial stocks in 2024: https://mapsignals.com/map-blog/keep-betting-on-elite-financial-stocks-in-20...

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@mapsignalsApril 8

Macro: Strong Momentum isn’t a Reason to Sell Stocks

This rally has been an epic bear crusher. The S&P 500 rallied 28% from October 27, through the end of first quarter.

Don’t let that big performance scare you. Strong momentum isn’t a reason to sell stocks.

Thing is, the higher stocks have risen, the more bears have called for a sell-off.

A broken clock is right twice a day. The bears are finally having a moment.

Fed uncertainty and rising Middle East geopolitical tensions have put volatility back on the table.

Our macro message for investors (not traders) remains the same: stay the course. This broadening rally has plenty of gas left in the tank over the next 12 months.

Remember, bull markets are born on despair, mature on skepticism, bloom on acceptance, and finally die on euphoria. This time-tested behavioral evolution takes an average of four years to play out.

Wall Street’s obsession with calling the top smacks more of skepticism than euphoria.

Today we’ll show you why recent volatility is a buying opportunity. Then we’ll show you three new sectors with the most upside as this broadening bull market keeps on chugging.

Strong Momentum isn’t a Reason to Sell Stocks – Resist the Urge

The market’s climb has been awe-inspiring. A quick look at market history shows just how strong it’s been.

Since 1990, the S&P 500’s median six-month gain is 4.8%. That’s less than 20% of what Mr. Market delivered from late October through March 31!

We know it’s tempting to cash out after such a massive run. Keep reading to find out why that would be a big mistake.

The market’s momentum is undeniably strong. But it turns out that turbo-charged rallies are a reason to buy, not sell.

Since 1990, the S&P 500 has averaged a 13.2% gain in the 12 months following top-quartile six-month rallies, compared to a 9.6% gain in the average 12-month period.

The old adage of strength begets strength rings true:

However, we’re not saying a pullback is off the table.

Short-term drawdowns are healthy. They reset investor expectations, making bull markets more sustainable.

Near-term dips are also relatively common. Statistically, pullbacks of 5%-10% happen practically every year, though they usually only last a few months.

Given the strong odds of outsized upside looking out 12 months, the smart move isn’t to try to time short-term swings, but rather to buy dips to profit from big gains in the year ahead.

What This Means for Your Portfolio

In January, we told you Macro Drivers Signal a Broadening Rally in 2024.

Market participation is kicking into high gear as strong growth and rising interest rates fuel a rotation out of technology and into more cyclical sectors. Energy, industrials, and financials are now leading in 2024.

It’s a safe bet that cyclicals will play a bigger role in driving this bull market’s next leg higher.

Note the YTD leaderboard has reshuffled as investors favor more cyclical areas:

Let’s dig into each of these emerging sectors to see why they’re attracting the Big Money:

Energy’s biggest macro driver is oil prices. WTI crude oil is up roughly 17% this year, to about $86 or so per barrel, on the back of strong demand and increasing geopolitical risk. That’s fueling positive energy earnings revisions.

Meanwhile energy is still the cheapest sector in the market, trading at just 13.2 times 12-month forward earnings and still sports a relatively high 3% dividend yield.

Add it all up and it’s no surprise energy is 2024’s best performing sector amid surging Big Money buying.

Industrials are benefiting greatly from the economy’s resilience. As the once “inevitable” recession continues to be a no-show, Big Money is piling into this cyclical sector.

In addition, an increasing share of industrials’ revenue comes from higher margin, after-market services. The Internet of Things and AI will only accelerate this trend going forward.

Industrials’ 12-month forward earnings per share growth was recently revised up to 10%, helping fuel the sector’s expanded price-earnings ratios.

Financials stocks are seeing increasing Big Money buying thanks to light institutional positioning after a long stretch of frustrating underperformance. There’s plenty of room in most professional portfolios for higher exposure.

Banks are rallying thanks to better-than-expected economic growth. And when the Federal Reserve eventually cuts interest rates, short-term bond yields will fall, steepening the yield curve, making bank lending more profitable.

But there’s a lot more to the financials sector than banks. The space includes leading global data vendors like S&P Global ($SPGI), exchanges like CME Group ($CME), credit card companies like American Express ($AXP), investment banks like Goldman Sachs ($GS) and Morgan Stanley ($MS), as well as big asset managers like BlackRock ($BLK) and Blackstone ($BX).

They’re all doing increasingly well amid strengthening capital markets, low default rates, and tight credit spreads.

The sector is sporting a healthy 11.4% estimated 12-month forward EPS growth rate. It’s also the third-cheapest sector in the market, with a 12-month forward P/E of 16.

All this jives well with MAPsignals’ latest sector rankings. Check out how energy, industrials, and financials recently toppled tech to lead our rankings:

Bringing It All Together

Stocks have had an amazing run. But strong momentum isn’t a reason to sell stocks – resist the urge.

Since 1990, the S&P 500 has averaged a 13.2% gain in the 12 months following top quartile six-month rallies.

Don’t be afraid to buy any dips. The economy is stronger than expected and inflation is moving in the right direction. The Fed will eventually cut rates as inflation keeps cooling.

As for the recent escalation in Middle Eastern tensions, history shows stocks tend to bounce back quickly. Since 1940, the S&P 500 has averaged a 1.8% gain 3 months after geopolitical flare-ups.

Take advantage of volatility to buy cyclical sectors like energy, industrials, and financials. Economic resilience is helping them power record S&P 500 earnings.

It’s a safe bet these new sector leaders will play a bigger role in driving this bull market’s next leg higher.

If you want to find specific energy, financials, and industrials stocks ramping with Big Money support, get started with a MAPsignals PRO subscription. It’ll get you access to our portal that updates every morning, showcasing the exact tickers getting bought and their scores.

MAP your own stocks and exchange-traded funds. PLUS, you’ll get our prized Top 20 list in your inbox every Tuesday!

There are plenty of winning stocks to pick up on weakness as the market broadens out. If you’re a Registered Investment Advisor (RIA) or a serious investor, use a MAP to find them!

Invest well,

-Alec Young

MAPsignals

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MAPsignals

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@mapsignalsApril 4

Keep Betting on Elite Financial Stocks in 2024

The mega rotation is only gaining momentum.

As indices bob and weave, one interest rate sensitive area is soaring.

Keep betting on elite financial stocks in 2024.

We’ve had quite a shift in tone the last few weeks. First, we told you there were 4 smart reasons to buy energy stocks.

Then we made the bold claim that unloved small-caps are going to eventually do the unthinkable…make all-time highs.

Well, we’re going to keep the non-consensus research coming. We have a plethora of evidence that financial stocks are set to keep leading in 2024.

While much of the media’s focus is on rate cut predictions and why it can sideline stocks, many are missing the critical facts that financial companies have incredible technical and macro tailwinds this year.

Today, we’re going to showcase why we believe it’s a big mistake to not have a slice of your portfolio pie dedicated to this newfound leadership sector.

If you’re like me and enjoy historical studies, we’ve got you covered in spades.

Keep Betting on Elite Financial Stocks in 2024

Poll investors on which areas of the market are up the most since the October lows and odds are they’ll quickly say Technology.

That’s actually the right answer. However, Financials are quickly closing that leadership gap. Since the market lows in October, only 3 groups have gained over 30%: Communications Services, Technology, and Financials:

While the Tech and Comm-tech leadership intuitively makes a lot of sense given the A.I. buzz around semiconductors and software names, unbeknownst to many, financial areas have 2 major tailwinds flaring.

The first is a mechanically bullish narrative that we first showcased back in December 2023 when we proclaimed how many financial superstar stocks are primed for massive upside.

Back then, we notated an incredible event in our data. Over 50% of our Financials Sector universe was bought in a single day. This was exceptionally rare and off the chart:

I’ve made arrows pointing to the events in December and a handful of similar signals a few years back.

This is important is because we offered a strong historical study that proved that this level of new participation is not only ultra rare, but powerfully bullish months and even a year later.

On December 13th there were 111 financial stocks bought. A day later the record was set with 128 names accumulated.

Folks, as we showcased then, a tsunami of inflows is one of the most bullish signals you can find. We told you to expect big gains in the months ahead…and boy did they come.

3-months after the inflows were detected, the SPDR Financials Select Sector SPDR ETF ($XLF) has gained +11.2% from 12/13/23:

The great news is this move is far from over. Keep in mind that a year after this signal, XLF is up nearly 29% with a 100% batting average since 2013.

To recap on how powerful this datapoint is, here’s a look at how $XLF performs in normal instances vs. the handful of monster buy thrust days.

The blue bars reveal why you should expect nearly double the return when you’re riding inflow waves of this magnitude:

Data is powerful…and profitable.

While we can look back and have confidence going forward, it’s also imperative to measure today. In the last weeks, we detailed how a mammoth-sized reshuffling was occurring in our data.

Brand new leadership has emerged. Said another way, our system is pivoting away from Technology leadership towards real-world groups like Energy, Industrials, and Financials.

Here you can see that from our portal’s sector ranking. Energy is tops by a mile followed by Industrials and Financials:

This is a rebirth that is reshaping our primary business…our weekly Top 20 report. Brand new areas are beaming with major institutional sponsorship.

And when you study the major macro setup, it becomes evident why Financials are a top choice for savvy investors.

Here’s the 2nd analytical study. Back in December, we provided one of my favorite studies coming into 2024. Whenever the Fed stops hiking interest rates, Financials reign supreme.

Since 1994, post the final Fed interest rate hike, the Financials sector gains 30% on average a year later:

This chart offers a macro greenlight for banks, asset managers, and financial data firms. These are best-of-breed right now.

And it should make intuitive sense. As short-term yields fall, the yield curve steepens. Additionally, capital costs shrink. Both of these lead to more profits.

This is also why big investors are gunning for high-quality financial stocks.

Many of our top ranked stocks in Financials are up double digits since first being profiled in our weekly Sector Top 20 report.

Below is a blurred snapshot from yesterday’s release. You can see that the Top 20 equities are all up handsomely since first being profiled. The RETURN column indicates the performance since the ticker first made the list.

Additionally, I’m showing the non-blurred Bottom 10 that’s also included each week. Keep in mind that for our Financials Sector we group REITs in the mix as well.

Those areas have been hit hard with many of double digits since making the report. It drives home why having a solid process in place can help you navigate leaders and laggards in bifurcated markets:

The data has spoken: Keep betting on elite financial stocks in 2024. The technical, mechanical, and macro setup favors even more green in the months ahead.

There’s plenty of green under the surface.

Let’s wrap up.

Here’s the bottom line: We are banging the gong on financial stocks again. Since the market lows back in October, the group has gained over 30%, nearly in line with Technology performance.

Given the ultra-thrust signal that fired in December that suggests nearly 30% gains a year later for the group…keep betting on elite financial stocks in 2024.

Couple this with the fact that after the final Fed hike is in, Financials gain 30% a year later.

But the evidence doesn’t stop here. Financials have vaulted to a top sector in our data and our leading Top 20 stocks breaking out today are in this arena.

Don’t let new leadership pass you by.

Under the surface is a lot to like…use a map to find to spot the opportunity!

If you’re a serious investor, professional, or Registered Investment Advisor (RIA) looking for market leading research you can’t find anywhere else, get started with a MAP PRO subscription.

Learn the stocks our system loves and get member updates with actionable insights.

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@mapsignalsApril 2

Small-Cap Stocks Will Make All-Time Highs | S&P Small Cap 600 $IJR $IWM Analysis

We are in the midst of a massive rotation. Small Cap stocks will make all-time highs sooner than investors realize. If you are looking for $IJR ETF & $IWM ETF analysis, check out this video:

https://youtu.be/CuSN6n5Ms3M

YouTube

Small-Cap Stocks Will Make All-Time Highs | S&P Small Cap 600 IJR IWM Analysis

#SmallCaps #Stocks #LucasDowney We are in the midst of a massive rotation favoring recent laggards. Small-caps will make all-time highs sooner than investors...

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@mapsignalsMarch 28

The S&P 500 is about to wrap the quarter with a 10% gain. Resist the urge to time a pullback | @cnbc

“It’s much more profitable to stick around than try to time the markets,” Alec Young, our chief investment strategist said in an interview with @cnbc’s Bob Pisani.

“Markets tend to do much better than normal when we have had big moves like this,” he said. “You’re probably much better off just sitting on your gains.”

https://www.cnbc.com/2024/03/28/the-sp-500-is-about-to-wrap-the-quarter-with-a-10percent-gain-resist-the-urge-to-time-a-pullback.html

CNBC

The S&P 500 is about to wrap the quarter with a 10% gain. Resist the urge to time a pullback

After five-month epic runs like this, markets tend to be higher down the line.

MAPsignals

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@mapsignalsMarch 28

Small-Caps Will Make All-Time Highs Sooner Than Investors Realize

Money rarely leaves markets.

It rotates.

We are in the midst of a massive rotation favoring recent laggards.

Small-caps will make all-time highs sooner than investors realize.

As a data researcher, nothing gets me more excited than when a narrative shifts. Often, behavioral changes begin subtly…then the forward picture illuminates.

Last week, I highlighted how Energy stocks are ready to lead. The hidden message in that writeup was how a renaissance was underway in our data.

Leadership is changing…fast.

Turns out, this momentous reshuffling of the market deck is favoring smaller firms.

The recent all-time highs quoted by pundits has been large-cap focused. BUT I’m making the data-driven case that small-caps are next in line for success.

Not only is our data favoring the laggards, two historical studies prove why betting small could be the next big ticket.

Small-Caps Will Make All-Time Highs Sooner Than Investors Realize

Technology stocks have gotten all the glory. The A.I. resurgence has captivated the crowd. Fortunately for MAPsignals, back in early November we made the case for the sector to explode in 2024.

We saw a layup in the data…and it didn’t disappoint with Technology stocks gaining +22.88% since that post.

Today’s environment, however, signals more broadening participation in the market. Essentially, growth isn’t the only game in town.

Below shows this wonderfully. In the month of March, every major sector except Consumer Discretionary and Real Estate have outperformed Tech:

That’s a tidal wave price shift, favoring many smaller cap areas. Clearly, professional investors see value lurking in recent lagging areas.

Diving below the surface illustrates this beautifully.

When we tally all inflows this week, 86% of buys are focused in companies with market-caps below $50 billion in market cap:

Even more striking is how companies with market sizes of $50B+ barely had any buying to write home about.

Anyone overweight mega-cap tech has felt this in their portfolios with crowded high-flyers failing to notch new highs recently.

So, where is the newfound capital flowing specifically? I’m glad you asked!

As showcased last week, our sector rankings completely reshuffled with Energy taking pole position.

Industrials and Financials jumped to 2nd and 3rd place respectively, as many of the stocks in those areas attract Big Money:

Folks, there’s a lot of opportunity right now in many areas NOT on the lips of the media.

Battered small-caps are ready to surge and 2 historical studies only reinforce this non-consensus narrative.

First, let’s get into some technical data. The 1st quarter is nearly complete with the S&P 500 zooming 10%.

This is in stark contrast to small-caps barely eking out a positive return. The S&P Small Cap 600 is only up 1.4% this quarter.

If this underperformance has you feeling gloomy…consider this fact. Since 1995, whenever the S&P Small Cap 600 has had lackluster performance in Q1, to the tune of 2% or less, it kicks off a monster market-beating rally.

The following months of April – December surge on average 17.38%. A slow start to the year is quite bullish into yearend.

Marty McMAP is zooming in on the opportunity ahead:

Up to this point, we’ve got a really nice story building for small-caps. Sectors are reshuffling, money flows favor the area, and a weak start to the year is a very bullish technical omen.

BUT there’s one other major macro signal to consider. One that gives me the courage to suggest that small-caps will make all-time highs sooner than investors realize.

It’s due to the fact that interest rates are set to decline. The Fed effectively greenlighted rate cuts coming later this year.

Whenever rate cuts occur and the economy is humming along, small-caps rip!

Since mid-1995, whenever the Fed first cuts rates and the economy isn’t in recession AND doesn’t fall into recession a year later, the S&P Small Cap 600:

Gains 10.6% 3 months later
Soars 19.3% 12-months later with a 100% batting average

Ladies and gentlemen, the small-cap train is leaving the station.

Unbutton the bear suits.

A rally of 19% would easily put the lagging group into all-time high territory…stunning the crowd.

Anytime the technical and macro favors this amount of upside, you can bet single stocks will double and triple in this backdrop.

This is where having a market map is critical…

Let’s wrap up.

Here’s the bottom line: A small-cap rebirth is here. Sector leadership and money flows signal a reshuffling of the stock market deck.

Additionally, lackluster Q1 performance isn’t something to fear…it’s something to cheer.

Throw in the fact that the Fed will be cutting interest rates in 2024, and you’re staring at one heck of a bullish cocktail.

Our Top 20 leaderboard is reshaping weekly with all-star stocks in Energy, Industrial, and Financial sectors.

If your portfolio could use a recharge, don’t wait for the media bull whistle to blow…by then it’ll be too late.

Instead, use a map.

Tomorrow’s small-cap leaders are here today.

Go big by going SMALL.

If you’re a professional money manager, Registered Investment Advisor (RIA), or someone that take investing seriously, get a MAP PRO subscription and see the actual stocks under heavy accumulation day after day.

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