This Rally Isn’t a “Dead-Cat Bounce”

The other day, I had a chat with a friend. We discussed our families and life during the coronavirus.

We also talked about the economy and the market. And one thing we agreed on was that the media’s comparisons of this crash to the Great Depression aren’t justified.

Here are just a few of the key differences we mentioned:

• Roughly 11,000 banks failed in the wake of the 1929 stock market crash. This banking system collapse further fueled the Great Depression. But we’re not seeing that type of bank breakdown today.

• While unemployment has hit record numbers during the COVID-19 crisis, it’s not accurate to compare it to the 25% unemployment rate during the Great Depression. There are many employment factors that have changed between the two periods. (For example, today’s typical household has two earners, as opposed to having one main breadwinner back then.)

• The Great Depression was also intensified worldwide by the Hawley-Smoot Tariff Act of 1930. This increased U.S. tariffs and decreased international trade during a time when interest rates were rising. Today, global monetary policy is in “easing” mode – with low interest rates and a flood of liquidity.

Now, what we didn’t agree on was the recent massive rally in stocks…

We’ve seen the S&P 500 rebound over 28% since the bottom on March 23. But my friend believes this is a “dead-cat bounce.”

In other words, he thinks this is a short-lived recovery and that the market will continue trending downwards – even as far as the S&P 500 hitting the 2,200 level again.

And I know he’s not the only one who feels this way.

But here’s the thing: I don’t let my emotions dictate my market predictions. Instead, I follow the data. It’s the only way to keep a clear view of the big picture.

So today, I’ll reveal what my system’s saying about the market’s rally – and why this isn’t a dead-cat bounce…

The Data Is Accurate

Regular readers know that I created an “unbeatable” stock-picking system that focuses on market data. It follows the big money’s movements.

Now, I used my experience from nearly two decades at prestigious Wall Street firms – regularly trading more than $1 billion worth of stock for major clients – to make sure my system is highly accurate, comprehensive, and effective.

It scans nearly 5,500 stocks every day, using algorithms to rank each one for strength. But it doesn’t just look at individual stocks. It also tracks big-money buying and selling in the broad market.

And this data is so accurate, it was only one trading day off in predicting the March 23 bottom. Remember, my system’s market timing indicator – the Big Money Index (BMI) – called for the trough to be on March 20.

It’s also forecasted eight other market moves during this pandemic-related sell-off… including the rebound rally.

Today, the BMI is at just over 60%:

As you know, when the index hits 80% (the red line in the chart) or more, it means buyers are in control and markets are overbought. And when it dips to 25% (the green line) or lower, sellers have taken the reins, leading the markets into oversold territory.

Now, the index level is rising because selling has virtually vanished – not because the big money is flooding in to buy again.

But this is still good news for us…

This Is No Dead Cat

You see, the extreme selling (through massive hedge fund liquidations) is over. So the worst of the selling is behind us. We just need to be patient for the big money to start buying in droves again.

This is normal after huge washouts like we saw last month. The market simply needs time to catch its breath.

In fact, my system identified 127 similar times where the market rallied after selling evaporated. And the S&P 500’s average forward returns after these periods are all positive…

While these returns may seem small in comparison to the over 28% rally we’ve already seen… it shows that the market is still likely headed upwards in the long term.

So even if we do see some pullbacks in the near term due to volatility, the market’s trend is still higher. This is not a dead-cat bounce.

Instead, stocks are finding their footing during this Great Reset. And we can profit from this huge money-making opportunity over a decade in the making.

We just need to target the high-quality phoenix stocks I’ve been writing to you about. They’re the ones that bounce back even higher when the market rebounds – like tennis balls.

And my system can pinpoint them for us. Right now, it’s saying the top tennis-ball stocks are hiding out in the information technology and health care sectors.

If you want broad exposure to these sectors, you can consider buying the Invesco QQQ (QQQ) ETF. It holds 53 top infotech and health care stocks.

But if you want to make potential average gains of 2,505% after this recovery, you can learn how to access my system’s next pick in this special presentation.

It’ll show you all you need to know about how to truly profit from the Great Reset.

Patience and process!

Jason Bodner
Editor, Palm Beach Insider

P.S. My system has already identified several winners for subscribers to my Palm Beach Trader service during this crisis.

One has rocketed over 52% in just over a month. And another is up nearly 15% in under a week.

But don’t worry. You can still join us on finding the next tennis ball to profit from right here.