So what is Big Money? In other words, this is when a stock drops in price along with large volumes. This indicates that the institutions are selling the shares.
Smart fund managers are always on the hunt for the next hot stock. And InMode has a lot of core qualities that are appealing. But sometimes when values fall, fund managers are looking to sell or may be forced to liquidate.
This downward movement creates uncertainty for the stock going forward. And as I’ll show you, Big Money recently exited stocks.
You see, fund managers are always looking to bet on the next outlier… best-in-class stocks. They spend countless hours evaluating companies, reading reports, talking to analysts, and more. When they find a company that is pulling all the cylinders, they leap big. But Big Money sells too, especially when the going.
This is why I learned how essential it is to assess the demand for Big Money stocks. To show you what I mean, take a look at all the Big Money signals that INMD has issued in the past year.
We recently saw Big Money selling activity. Each red bar signals large trading volumes when the stock price has fallen:
In the past three months, the stock has attracted 4 Big Money sell signals. Overall, the recent red bars could mean more uncertainty ahead.
Now let’s take a look at the technical action that caught my eye:
Considerable underperformance is a clear red flag for major stocks.
Then it’s a good idea to check under the hood. That is to say, I also want to understand the fundamental history. As you can see, InMode has increased its sales and profits at a double digit rate. Looked:
- 3-year sales growth rate (+ 58.4%)
- 3-year profit growth rate (+ 119.7%)
Combining good fundamentals with technically superior stocks is a winning recipe in the long run. But when there is a disagreement between the two, it could mean that the situation has changed. Or it could be a huge game of long term value on a big stock.
In fact, INMD has been one of the top rated stocks in my research company, MAPsignals. This means the stock has come under buying pressure, strong technical data and growing fundamentals. We have a ranking process that features actions like this on a weekly basis. Usually, when the selling dries up, good stocks pick up again.
INMD had a lot of qualities that attracted Big Money. Since it started trading in 2019, it has been topped the MAPsignals list 20 times, with its first appearance on 12/22/2020… and has gained + 128.01% since then.
Despite the recent decline, the underlying story is solid. The blue bars below show the times InMode was a top pick since 2019:
It is a leading title in the healthcare industry according to the MAPsignals process. I wouldn’t be surprised if INMD reappears on this list in the years to come. Let’s tie it all together.
The bottom line
The drop in InMode gives the impression that the stock is oversold. Big Money Selling Stock signals to take note. Given historic stock price gains and strong fundamentals, this stock could represent huge long-term value and still deserve a place in a growth-oriented portfolio.
Disclosure: The author holds long positions in INMD in personal and managed accounts at the time of publication.
Learn more about the MAPsignals process here.