I’ve been pounding the drum incessantly lately…
If you’ve been following me since the current market rally started in March 2020, you probably know it verbatim.
Continue to ride this wave until it crests – and keep some cash on hand. When the market finally does pull back, we’ll have good entry prices on some high-quality stocks.
But even the best advice can ring hollow over time. People start to tune out.
I don’t want you to make that mistake.
You see, since the March 23 lows, the S&P 500 has rocketed over 43%. It’s the fastest bounce back in history.
And remember, my “unbeatable” stock-picking system was just one trading day off in calling that bottom. (It predicted a date of March 20.)
Right now, it’s saying the market is overheated. The data also shows that, over the last 30 years, overbought periods like this last an average of a month, but as long as over three months…
Since the market went overbought on May 6, we’ve already hit that month-long average mark. So we could see a pullback any day now. It could be tomorrow or two months down the road.
That’s why I keep telling you to continue to ride your winners. The market can act irrationally much longer than you think. And we might as well take advantage of it.
But the other part of the equation – keeping cash on hand to buy the pullback – requires patience.
Today, I’ll show you how that patience pays off…
Patience and Process
As you know, my system scans nearly 5,500 stocks every day, using algorithms to rank each one for strength. But it also looks for the buying and selling movements of big-money investors in the broad market.
And on March 18, my system’s Big-Money Index (BMI) plunged into oversold territory. Here’s the chart I showed you back then…
When the index hits 80% (see the red line above) 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, oversold conditions usually mean selling pressure has reached a bottom – and a bounce is likely ahead. So at the time, I wrote: “Make no mistake, this is a key moment of recovery for stocks.”
And to take advantage of this huge money-making opportunity, I created a “Shopping List” of potential outlier stocks for my Palm Beach Trader subscribers.
But instead of buying them right away, we had set our buy-up-to prices below current prices. This was my rationale:
Even though general market sentiment has improved, coronavirus-related volatility is still present. So my system expects some more pullbacks along the way. If there are pullbacks, we’ll be able to scoop up our Shopping List stocks on sale.
And if there aren’t, we won’t sweat it. Our existing holdings will keep gunning higher, and we’ll still profit from the rise. That’s the beauty of this strategy: Either way, we won’t lose.
One stock my system pinpointed was life sciences software firm Veeva Systems (VEEV). We added it to our list on March 17… and scooped it up when it pulled back the next day. Since then, it’s up over 84%.
And we used the same game plan for Old Dominion Freight Line (ODFL). We added it to the list on April 9 and bought the dip on April 21. In less than two months, it’s up over 34%..
[Note: Both VEEV and ODFL are currently above their buy-up-to prices. So I don’t recommend establishing a position now.]
Of course, some stocks on your shopping list might not sell off. Instead, they run away and out of range.
In PBT, that happened with Shopify (SHOP). My system flagged it and added it to our list the same day as ODFL. Unfortunately, it never hit our limit price. Still, my system was right about it… because it’s rocketed nearly 80% since then.
But as I said, that’s the beauty of our strategy. Even if we don’t get into every stock on our list, we’ll still profit. You see, in the meantime, we’re letting our winners continue to run…
For example, our PBT portfolio currently has an 82% win rate and average returns of over 62% – even through the pandemic-related crash.
That’s the power of patience and process!
Just Like Mom Used to Say…
Yes, I know I’ve been sounding like a broken record lately.
But it’s like when you were a kid and your mom constantly told you to eat your veggies. You didn’t want to hear it then. But in the long run, you knew she was right.
It’s the same with stocks. My system is tried and true – just like eating your veggies. And until the data reverses, we’ll continue to carry out the same game plan.
Let our winners keep winning… Keep some dry powder ready for the inevitable pullback… Put together a shopping list of potential outlier stocks… And be ready to strike when my system gives us the “go” signal to buy.
When this market pulls back, we’ll be like kids in a candy store. And trust me… like mom used to say… it’ll be worth the wait.
Patience and process!
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Jason Bodner
Editor, Palm Beach Insider
P.S. My system clearly made the right bets on VEEV, ODFL, and SHOP. And it’s been correctly forecasting the market’s overall moves for months, too.
But it’s not too late to profit from this rally… or the coming short-term pullback, either. You simply have to target the outlier stocks like the ones I’ve pointed out. They’ll outperform, no matter what direction the market’s headed in next.
So be sure to join me and my PBT subscribers in continuing to make average gains of 62%. Find out how – with all the details of my system – right here.