In these updates, I want to focus on which sectors are seeing big buying or selling. Most importantly, I want to use this information to share where the market is headed with all of you.
So today, I’ll share what’s behind the most recent bout of selling—and why we want to go shopping when there’s blood in the water…
Click the image below to watch the video (or scroll down to read the transcript).
Hi, everyone. It’s Jason Bodner here. And I want to welcome you to our new e-letter, Palm Beach Insider.
Just to catch you up, I spent well over a decade on Wall Street trading some of the largest order flows out there. I was in a really special seat. It taught me the power of huge money rushing into stocks and what it can do for price action.
Once I knew how important this information was, I had to go build a system to find when this big money is rushing into the best stocks. It took me years and tens and tens of thousands of dollars to build it. But my partner and I finally did it. And simply put, it’s the real deal. There’s really nothing else like it out there, period.
Now, in these updates, I want to laser-focus in on which sectors are seeing big buying or selling. But most importantly, I want to use this information for where the market is headed and share all of it with all of you.
An Unwind in Software
So what’s happening right now? Well, we’re seeing big selling in software stocks. These high-flying software companies have great profit margins. They’ve been a magnet for big-money buying all throughout the last year. This sector’s been on fire—gaining week after week after week… until recently, when we saw a big unwind.
And what we believe is happening is, there’s a reversion trade. All that means is: Many fund managers and investors were overexposed. They had too much software exposure in their portfolios, and they got caught the wrong way. They were short on some of the weaker groups like semiconductors and small-cap stocks.
But all of a sudden, there was a rally on their shorts. They got squeezed and started losing money there. And they had to cover their shorts while also trying to find some profits. And guess where all the big profits were? Software. So that’s the unwind we’re seeing right now.
Shopping When Blood’s in the Water
But here’s the deal, and this is what I want you to know: There are still huge deals to be had. I believe there are incredible bargains when silliness like this occurs. I want to go shopping when there’s blood in the water. So right now, I’m looking for where the best, on-sale stocks are which will be the outliers of tomorrow.
Let’s look at some other sectors, too. Defensive groups are the strongest right now—like utilities and real estate. That’s not always the case, but this typically happens when the big money rushes out of higher-risk stocks. It’s looking for safety and yield, even with high dividends in a low-interest-rate market. That’s why we’re seeing a rush into utilities and real estate. But this won’t always be the case, and it’s certainly nothing new.
We’re still seeing decent selling in other areas of technology like health care as well, not just in software. So groups like biotech and health care management got crushed last week. And this is all related to the big money worrying about Senator Elizabeth Warren potentially getting the Democratic presidential nomination. You see, she kind of has her eyes set right on biotech and health care.
The important thing is to not get scared out of the best stocks because of this type of price action. It happens. But it’s just noise. It’ll pass eventually, and everybody else’s fear is our recipe for opportunity. That’s our time to go shopping.
And if you want to know more about the specifics of my system—how it works, the stocks I like now, how I see the world, etc.—I want you to join me and reserve your spot right now for Wednesday night’s event in New York City. Just click on this link. You definitely don’t want to miss it, and I will see you there. Until next time…
Editor, Palm Beach Insider