Here’s Where the Money Is Flowing BY JASON BODNER, EDITOR, QUANTUM EDGE PRO I grew up in Florida, and I live there as an adult. But unlike a lot of other Floridians, I am not a surfer. At least not of ocean waves. I prefer the bigger and more lucrative waves of money flows. They also give you a thrilling ride, but if you pick the right waves, they last longer and you come out of them richer. These are the trillions of dollars the largest investors on the planet buy and sell stocks with every day. No physical skills are needed to ride these waves, which is a good thing in my case, but you must be skilled at spotting them. That’s easier said than done because the pros treat their trading activity like a poker match – they don’t want to tip their hand. I spent years as a go-between on these very trades, so I took what I learned, along with the very tricks I used, and incorporated them into the algorithms of my Quantum Edge system to track these massive money flows. Institutions account for 70% to 90% of daily trading volume, so these are the waves of wealth creation. And where do we spot these waves right now? In these unusual times, money is flowing into unusual places. It happens only rarely, but the strongest sector in my system right now is Utilities. Here’s what my screen looks like: 
Source: MAPsignals.com When Utilities are king of the hill, it screams “defensive investing.” That makes perfect sense with the lingering uncertainty over tariffs, the massive selling in early April, and the Federal Reserve’s policy on interest rates. Big Money is going after stability and dividend yields. For now, anyway, but it won’t last. Utilities can provide income and stability in a diversified portfolio, but they are not the big-time wealth builders, and they are not leaders in bull markets. I’m not much of a Utilities investor, but the second-strongest sector does present interesting opportunities. I don’t typically invest in Financials, either, at least in stocks of traditional financial companies. But I see several non-traditional ones with excellent quant ratings that are attractive right now. | Recommended Link | | | | Apple, Amazon, Meta, and Microsoft have each created incredible innovations, making investors wealthy along the way. Thanks to his system, Louis Navellier spotted each one of these companies before they became mega-cap household names. Now, his proprietary system is lighting up in a whole new way. It’s pointing to a powerful economic force that’s creating major wealth opportunities… while disrupting careers once considered “secure.” This transformation isn’t just affecting a single industry – it’s fundamentally altering the foundation of our economy. Watch Louis’ new video that explains how to ensure you’re on the right side of this historic wealth divide. |  | | Think Outside the Bank Box When we’re in bull markets – which is most of the time – Technology and Discretionary sectors lead the charge. I expect they will regain their top spots in the coming months. There are good long-term buying opportunities in those sectors. But there are also high-probability investments within the relative strength in Financials right now – if you know what to look for. The biggest problem with “traditional” financials – the big banks – is that they typically carry large debt. They borrow money to loan money. Here are the three biggest U.S. banks and their current debt levels: - JPMorgan Chase (JPM): 228.4% debt-to-equity ratio
- Bank of America (BAC): 225.9% debt-to-equity ratio
- Citibank (C): 284.6% debt-to-equity ratio
All three jumbo banks have over twice as much debt as what they are worth. That doesn’t mean they are doomed, though it might in other industries. That’s the banking business model, and the best banks have figured out how to make it work. But all my data and historical studies clearly show that excessive debt weighs on a stock’s potential. For longer-term investors seeking outsized profits, “non-traditional” financial stocks with strong quantitative ratings have a higher probability of making good money. In fact, a clear theme emerges when I look at the highest-rated financial stocks in my system as I write this: Nine of the top 20 – nearly half – are in the “securities sales and trading” subindustry. These are exchanges where trading occurs. Exchanges don’t borrow and lend money, so they don’t carry debt. And with trading now done electronically, I think of them more as technology companies that operate in the financial sector. Tech companies typically generate higher growth and profit margins. The top financial stock in my system right now is Tradeweb Markets (TW), which builds and operates electronic marketplaces. I see TW often among the top stocks, which is why I recommended it to my Quantum Edge Pro readers two years ago. Shares have just about doubled in that time. TW didn’t escape the early April sell-off, but shares have bounced nearly 20% from their lows in a nice reversion back toward all-time highs. That bounce reinvigorated TW’s technical strength, which combined with excellent fundamentals yields a Quantum Score of 86.2. 
Source: TradeSmith Finance That’s borderline “too good.” But I wouldn’t squawk over it. I’ve found the optimum Quantum Score for buying is between 70 and 85. TW is a smidge above 85, lifted by those muscular technicals at 88.2. When the Technical Score gets to 90 and above, I get a little hesitant because it often signals “overbought” and could mean a short-term pullback. But with those rock-solid fundamentals at 83.4, the long-term outlook is statistically attractive. Sales have grown 17.3% on average each of the last three years, while earnings averaged 28.2% growth. And, contrary to our earlier point about banks, TW’s debt-to-equity ratio is a measly 0.6%. A lot of us are tired of the roller coaster ride in stocks, but it’s a good time for exchanges. TW rates the best, but I see other well-known exchanges in the buy zone right now as well, including: - CBOE Global Markets (CBOE): Quantum Score = 79.3. Nice balance of fundamental and technical strength.
- CME Group (CME): Quantum Score = 79.3. I would be leery in the short-term of the 91.2 Technical Score.
- Nasdaq (NDAQ): Quantum Score = 75.9. Fundamentals are solid at 66.7, but I prefer Fundamental Scores in the 70s or higher.
I see opportunities in other areas of finance as well. Also in my top 20 financial stocks are insurance companies (great cash generators), consumer finance services (like credit card companies), asset managers, and even a real estate investment trust (REIT). I also just recommended another non-traditional financial stock to my Quantum Edge Pro readers. It’s a financial services and payments company that leads the field in one area and provides private-label banking and technology services to customers ranging from startups to Fortune 500 giants. It has run up 9% in the week since I recommended it, and it still rates a buy. 
Source: TradeSmith Finance So yes, count me in on the Financials wave. Finding the right financials leads us to the crest, which is where we get the best, longest, and most profitable ride. And my Quantum Edge system scours millions of data points every day to find stocks like these with top Fundamental and Technical Scores – as well as big interest from Big Money. After all, like I mentioned earlier, institutions account for 70% to 90% of daily trading volume. So when a wave of Big Money targets a particular stock – like the financial company I just recommended in Quantum Edge Pro – it has the potential to quickly surge higher. All of this volatility we’ve seen in recent months makes it a great time for this strategy. It’s finding me all kinds of exciting stocks to recommend for you, like my hotlist every week of the top- and bottom-ranked stocks in my Quantum Edge system. To find out more, click here now. Talk soon, 
Jason Bodner
Editor, Quantum Edge Pro | 
No comments:
Post a Comment