Nick’s Note: Last Friday, I introduced Daily readers to our newest analyst, Jason Bodner, editor of Palm Beach Trader. Around the offices, we call Jason the Whale Hunter. That’s because he’s figured out a way to track billionaires—whale traders whose buying can push stock prices higher—and ride them to profits.
In today’s essay, Jason pulls back the curtain on his system to show you where the whales are headed right now… and how to ride along with them…
By Jason Bodner, editor, Palm Beach Trader
World-famous surfer Laird Hamilton once said: “Surfing’s one of the few sports that you look ahead to see what’s behind.”
But surfers need to find a wave first. Sometimes, they sit floating for an eternity while waiting for the perfect wave. But when the right one does come along, they must be ready to ride it…
Investors face the same scenario…
We know a wave of money is coming into the market at some point… But we must wait for the right time to buy. If we’re not ready, we’ll miss it altogether.
So where is the next wave of money headed?
If the answer was so easy, no one would need a leg up in the stock market.
But that’s exactly what the market can give you—if you know where to look.
In today’s essay, I’ll show you which sectors are riding waves of buying right now and why you should add some exposure to your portfolio…
Who Causes These Waves
I spent nearly two decades on Wall Street, including eight years heading a trading desk for Cantor Fitzgerald, one of the world’s top investment banks.
That’s where I first saw clues about these massive waves of money. They’re often caused by “whales” buying up millions of shares as discreetly as possible.
I’m talking about big institutions—like pension funds and billionaire investors Warren Buffett, John Paulson, and George Soros.
These whales try to keep their buying quiet… But when millions of shares are being bought, they leave clues. The clues can be subtle, but if you know what to look for, you can find them.
And I designed a system to sniff them out. My “early detection” system looks for unusual institutional buying and lets us invest right alongside them… before the rest of the world finds out and piles in.
Each morning, I run my proprietary system and pull more than 120 data points on over 4,000 U.S. stocks. But only a handful trigger a buy signal.
That’s just the first step.
In the next step, I filter them through my algorithmic matrix to find only the best of the best.
One example of my system at work is Align Technologies, which pioneered clear dental braces. My system flashed for Align on July 31, 2012. It’s rocketed 581% since then.
Another example is SolarEdge. I told a group of traders that the company had triggered my system during a presentation in April 2017. In just 13 months, it jumped 333%.
Nothing is more powerful at identifying whales than following the waves they create.
These massive investors collectively manage trillions of dollars. They have multimillion-dollar budgets and a small army of professional analysts conducting research. And when they start buying a stock, they lift the price higher and higher.
So where are the whales headed today?
What’s Triggering My System
I have seen huge buying and big bets flooding into a few sectors recently. But the most interesting is the consumer discretionary sector. Money is pouring into restaurants, discount retailers, apparel companies, and footwear stocks.
This has me giddy.
It’s very bullish because it means the U.S. economy is strong. American consumers have extra money to spend… and they’re buying more clothes, more shoes, and eating out more often. These extra purchases are usually curtailed when times get tough.
And institutions are picking up on this…
Last week alone, buy signals in consumer discretionary stocks overwhelmed my system.
It filtered them down to 219 consumer discretionary stocks that institutions can easily trade. Of those, 151 triggered buy signals in that sector. In other words, institutions bought up 70% of the sector in an unusual way.
And that means higher prices ahead for consumer stocks.
It’s not just juggernauts like Amazon lifting the entire space, either.
We’re also seeing buy signals in companies like G-III Apparel Group, Callaway Golf, Netflix, and discount retailer Five Below.
One way to get exposure to the whole sector through the Consumer Discretionary Select Sector SPDR ETF (XLY). As I write this, XLY is right at its 52-week highs.
With all these powerhouse signals of institutional buying, I expect the sector will keep on chugging higher.
Right now, surf’s up for consumer discretionary stocks.
Editor, Palm Beach Trader
Nick’s Note: Each morning, Jason runs his proprietary system and pulls more than 120 data points on over 4,000 U.S. stocks. But only a handful trigger his buy signal. And consumer discretionary isn’t the only sector triggering his system…
This Sector Is About to Break Out
The biotech space is an exciting place to look for huge growth potential.
Historically, some of the biggest returning stocks have come from this sector as breakthrough technology becomes blockbuster products.
As you can see below, the SPDR S&P Biotech ETF (XBI) is revisiting its January and March highs… It should break through overhead resistance soon.
Year to date, XBI has returned over 11.5%. That’s compared to 3.86% for the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, and 2.22% for the Health Care Select Sector SPDR ETF (XLV).
Outperformance in sectors tends to persist… So a breakout above the $98 level in XBI suggests higher prices are likely around the corner.
P.S. You can learn more about how I find breakout stocks, including five stocks that have already triggered my proprietary system, by clicking right here…
President Trump has mobilized his entire administration to battle this problem by declaring it a National Emergency under federal law. And Congress just approved $6 billion to fight it.
Now, a company is joining the battle by tackling one of the biggest problems our country has ever faced. In the past, companies in this niche saw peak gains of 95,800%, 63,400%, and even 216,100%.
Could this new company be the next to ride this unique wave?