Parallax is a cool word. It describes how the apparent position of an object looks different when viewed along two different lines of sight. Here's the easiest way to show you. Hold your right index finger like a number one at arm's length positioned between your two eyes. Now look at it closing only your left eye. Now switch eyes closing only your right. Notice how the finger jumps in position a little?

That's the parallax effect. Now imagine that same effect at stellar distances. That's what NASA talked about in its press release: New Horizons Conducts the First Interstellar Parallax Experiment.

Long story short: the New Horizons space craft took an image of Proxima Centauri. That's the closest star to Earth (hence Proxima) at 4.2 light years away. The light we see from that star left it 4.2 years ago. New Horizons was over a billion miles from Earth when it snapped the pics. 

There's a discernible difference between our vantage point on Earth and 4 billion miles away (well past Pluto and the Kuiper Belt). It took over six hours for the images to reach Earth.

Perhaps the coolest part of the project is that the images were produced by New Horizons scientists and team collaborator and astrophysicist Brian May. May's day job was "guitarist for Queen." Don’t ever let anyone tell you "don't quit your day job."

A change of perspective can change – well, everything! A distance of 4 billion miles away is the galactic equivalent of an inch or so relative to the size of the United States. So, if things look different from such small relative distances, imagine what the constellations look like just a few light years away. Totally different.

I did a presentation for the MoneyShow last Friday. On it, I explained that I see the world of stocks differently than most. I have a different perspective. I believe that there is an underlying sea of influence permeating the market. It is invisible to everyday investors, financial media, and the masses at large. 

This is much like our Earth's crust floating on a monstrous sea of magma. Most of us don't know it's there. We're only reminded every now and then when a volcano spews out lava.

Here, I'm going to show you the invisible sea underneath what is normally seen on charts and financial news shows. And I'll show you what it's telling us about the near-term future for market prices.

Let's start with the trusty Big Money Index (BMI). Think of the S&P 500 as the Earth's crust. We build, breathe, live, and love on it. Investors are glued to the intraday and end-of-day prices that it displays. But as you can see with the BMI, many are oblivious to the idea that the S&P 500 floats on top of the big money. If you were to peel back the S&P 500 from this chart, you would see that the big money often tells us where the market is heading in advance. It happened weeks before in January. And it's happening now. 

Chart showing the performance of the S&P 500 and the Big Money Index (BMI)

Imagine surfing on the BMI blind to the market at large. You ignore the Earth's crust to be a magma surfer. After all, the solid crust above just floats on the hot liquid sea.

With the BMI ocean serving as a leading indicator, surely we can witness waves. That's exactly what you'll see in the next few charts: waves of big money ebbing and flowing in and out of stocks and exchange-traded funds (ETFs).

The left chart shows all big money stock trading. Think of it like unusually big volume. There was a massive surge in volume as money gushed out of stocks in March. But notice how, just before, there was a drop-off. Like when the sea draws backwards before the next wave comes.

The right chart shows big money buying and selling in stocks. You can see the fluid waves of money underneath the market. As money moves in and comes out of markets, we need to pay attention to the troughs and crests. When selling hits extremes, bottoms are near. When buying hits extremes (like now), tops are often near.

Chart showing the performance of the S&P 500 and big money buy/sell signals

I told you last week that, when ETF buying gets nuts, you need to watch out. Once again, the underlying wave troughed and crested in advance of the market bottom and top. The point is worth bolding. The magma sea foretells the direction of the crust.

Chart showing the performance of the S&P 500 and ETF buy/sell signals

Wayne Gretzky said, "focus on where the puck is going, not where it's been." In markets, you can't stop the wave, so you should learn how to surf. But it's important to surf the right waves. That's why we focus on the invisible waves. We try to illuminate those because that’s where the big money is headed.

And those who focused on the right big money waves were informed. Because just like that, risk repriced. Thursday's swoon in stocks felt like a storm, but I told you it was coming. 

Remember, it wasn't unexpected. For two weeks, I have been talking about extreme exuberance and FOMO. On Monday, there were still buyers stepping in. Then the water suddenly sucked out and buying dropped off by 90%. The five-day average buying was 350. Tuesday saw 33 buys.

Chart showing the performance of the S&P 500 and big money stock signals

Remember, last week I showed you crazy buying in all sectors. It happened again last week, but almost entirely on Monday. Then the vacuum. Almost all the yellow (the buying of more than 25% of stocks in the sector we track for big trading) happened Monday.

Table showing big money stock signals by sector

Humans are tricked into believing that all we see is what's there. But we really only see an estimated 0.0035% of the electromagnetic spectrum. There's literally more than 99% of the whole field that we don't see.

And that's how I see the market. I focus on the invisible waves. That different perspective offers a whole new world of sight. An astral parallax effect was recorded by a rock 'n' roll guitarist. Brian May knows well about different perspectives: "Astronomy's much more fun when you're not an astronomer."

The Bottom Line

We (Mapsignals) are bullish on high-quality U.S. equities in the long term, and we see market pullbacks as areas to pick up great companies. 

Disclosure: The author holds no positions in any mentioned securities at the time of publication.