Massively Outperform by Following the Money that Moves Stocks As the baseball playoffs get under way, the stock market itself is rounding third and heading for home. And through the first three quarters of the year, 2024 has been a hit. The S&P gained nearly 21% in those nine months, which is more than double the average annual return. That might even qualify as a home run. But we do have one more quarter to go. If history holds, the next couple of weeks could be bumpy. The first half of October is demonstrably weaker than the second half, and election years tend to add volatility. After that, however, the data indicates we should expect more home runs in the future. We will learn a lot more in the coming weeks as the next round of earnings reports come our way. As a data-driven investor, I still get pumped when earnings coming around every three months. They are critical to evaluating companies – and they are critical to my system’s fundamental rating and analysis of roughly 6,000 stocks. Perhaps more importantly, we also find out more about where Big Money is going. This is the money that moves stocks. Mutual funds and other investment vehicles typically have up to 60 days to file their holdings with the Securities and Exchange Commission (SEC). That’s when you see all the headlines telling you what Warren Buffett bought and sold in his Berkshire Hathaway portfolio. But waiting for these filings four times a year is a little bit like looking in the rearview mirror. Wouldn’t it be a huge advantage to have access to this information more than just quarterly? How about daily? That’s one of the biggest benefits of my Quantum Edge system. It tracks Big Money flows in virtually real time. I may not know who specifically is buying what, but after every single trading day I can see which stocks were bought and sold by the big guns that manage billions of dollars. In the middle of the night while I’m hopefully asleep, my system goes to work on a comprehensive analysis of the approximately 6,000 stocks traded on Nasdaq and the New York Stock Exchange. It pulls in 120 data points on each, then applies 80 equations on them to analyze multiple factors. Every company is scored on 29 primary ratings, including 17 technical factors that tell us how the stock is trading and 12 fundamental factors measuring the health of the company. All told, that’s nearly a million data points per day – and what a rich story it tells. Each stock is assigned a summary report like this one for Apple (AAPL), the most valuable company in the world with a market capitalization north of $3.3 trillion. Source: TradeSmith Finance That Quantum Score gets me most of the way there in determining whether a stock is a good buy that is likely to move higher: - Under 70 is typically not a buy, as the stock doesn’t have enough strength or momentum to get as far as others. AAPL’s score of 60.3 is lower than I like to see.
- Between 70 and 85 is right where I want it and means a higher probability of a potentially big payday.
- Over 85 gets trickier because the stock is rolling, but it could be overheated and face a pullback.
My Quantum Edge system then sorts stocks from strongest to weakest, giving me a cumulative “report card” of thousands of stocks. The higher up they are on our report card, the more likely they are to rate a buy. One of most important factors in all this is Big Money buying activity… finding out which stocks are being bought by billion-dollar investors, hedge funds, pension funds, and other big institutions. This gives us our best chance of hopping onto a stock surging on big institutional money flows. Having access to this information every day gives us a huge advantage over waiting for SEC filings that only come out four times a year. Here’s a good example of what I mean. During the 2020 crash, the Master Algorithm crunched all 29 data factors and overlaid them with Big Money buying behavior, and we got a Quantum Score of 70.69 for a company I never heard of: Enphase Energy (ENPH). The key numbers were solid, and Big Money was jumping in. ENPH shot up 473% over the following months. Spotting the Winners Amid the Noise I started tracking Big Money after spending years running trading desks and watching those trades – millions and even billions of dollars – passing through my hands. According to a study by Harvard University, trading by institutions and their member firms account for 80% of the trading volume on the New York Stock Exchange. That works out to roughly $15 billion traded every day by the big institutional firms. I learned the tricks of the trade to keep those massive money flows as quiet as possible, so Big Money won’t tip its hands. Knowing those tricks, I designed algorithms that act like x-rays – seeing below the surface to detect Big Money at work. This data has always been critical to picking winning stocks, but in today’s age of distrust and misinformation, tracking the actual flows of Big Money has never been more important. As the old saying goes, “Actions speak louder than words.” By tracking the money flows Big Money tries to hide, we analyze the actions the major players are taking, which are ultimately much more influential than the words being spoken. Use the upcoming earnings reports to analyze the strength of businesses you may be interested in owning a part of. Check the stock’s technicals to get a sense for how it trades. And remember the Big Money factor. It’s always better to ride the wave than fight it. Talk soon, Jason Bodner Editor, Jason Bodner's Power Trends P.S. It doesn’t matter who the big buyer is… or how hard they try to hide it… My Quantum Edge system detects this activity, often before Wall Street has a chance to catch on. My powerful system combines data-powered analytics with high speed computers and overlays all that with Big Money buying activity and a proprietary scoring system to give investors the opportunity to massively outperform the market. Click here to learn more spotting these important money flows and how to receive immediate access to our report card of recommended stocks. |
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