Having looked at some of them winners from a U.S. dollar rally in a previous article, I thought it might be illuminating to see who the losers might be. After all, investing is like a ball game: offense (picking stock winners) gets the glory, but defense (avoiding big losses) wins the game.

I have experience with analytical writing from a previous life as a financial journalist and a published author, and I have to tell you there is nothing that I hate more than seeing unsubstantiated glamorous statements that in their nature are little more than hot air. Strong opinions need strong facts.

Years ago, an executive editor who I worked with told me writing is like building a house. Your facts are your bricks, your insight and interpretation is your mortar. The house needs a good roof and a solid foundation. If you don't know what you are talking about, it will show up in your writing. Insight comes from knowledge and analytical writing; without insight, it is like building a house and leaving out the mortar. It will fall and in a mild gust of wind.

Having read my previous column, my firm's CIO, Louis Navellier, opined that I could use more data to single out the losers. Navellier & Associates is a fundamental quant firm and everything is back-tested, analyzed, dissected and optimized. One of the firm's quant analysts, Tim Hope, spent serious time with FactSet (a sophisticated database), and here is what he found: 70% of the largest 50 stocks in the S&P 500 may face upcoming sales and earnings troubles due to U.S. dollar strength.

"This is terrible," the CIO said when looking at the data. "I know the market is changing under the surface as I look at the weekly quant research, and we get very different results than we were getting six months ago. Dramatically different. I don't know if everyone sees what I see when looking at the top 50 S&P companies by earnings and sales revisions, but I see something big."

Here is what else he said: "We've turned a corner in market leadership, so I want to take extra time to unwind my analysis of what's happening and why, and how to consider investing in this new environment.

“First, let's start with sales growth, which has essentially gone ‘poof’ and disappeared, since approximately half of the S&P 500's sales are outside of the U.S. and have effectively been crushed by the strong U.S. dollar. In fact many companies now have negative forecasted annual sales growth, like Caterpillar CAT, -0.96% , -5.7%, Chevron CVX, -0.73% , -53%, Coca-Cola KO, -0.19% , -2.4%, DuPont DD, -2.43% , -5.7%, ExxonMobil XOM, -1.61% , -52%, Goldman Sachs GS, +0.01% , -3.8%, IBM IBM, -1.72% , -11.1, McDonalds MCD, -1.03% , -8.5%, Pfizer PFE, -0.51% , -3.6%, and Procter & Gamble PG, -0.10% , -9.2% (as of Feb. 6, 2015). Yikes! These dismal numbers underline the impact of a strong U.S. dollar crushing the sales of many large multinational companies.

"Second, let's look at earnings growth. With negative sales growth, it is increasingly hard for many stocks in the S&P 500 to generate tremendous earnings growth. In fact, many companies now have negative forecasted annual earnings growth, including some of the same names: Caterpillar (-16.1%),Chevron (-67.4%), Coca-Cola (-8.7%), DuPont (-12%), ExxonMobil (-29.8%), McDonalds (-8.3%),Microsoft MSFT, -1.24% , -20.6%, General Electric GE, -2.41% , -6.1%, Pfizer (-14%), and Procter & Gamble (-5%) (as of Feb. 6, 2015). Yikes again! Clearly there is a problem in both sales and earnings for many of these large multinational corporations.

"This same kind of leadership change happened after the mega-cap tech-stock bubble burst in March 2000. After the mega-cap stocks peaked, the tail end of the S&P 500 did much better, as did many small- to mid-capitalization stocks. This parade out of the previous leaders in the S&P 500 lasted for several years.

“In fact, the folks at McGraw Hill who are the keepers of the S&P 500 Index, got so frustrated that the tail end of the S&P 500 were beating the top end of the S&P 500, that they implemented a major realignment of the S&P 500, called ‘free float adjustment,’ which significantly reduced the capitalization weighting of the S&P 500 in 2005. However, since then, indexing has boomed again, and the S&P 500 has gotten too top-heavy once again. This is not likely to end well.

The bottom line is that we are now unquestionably in an increasingly narrow stock-picking market, and the 'sweet spot' in the stock market is moving down the capitalization ladder to the mid-capitalization area. However, the good news is that this is the kind of market where smart stock selection can deliver gains vs. general market averages."

We, as a firm, have never thought indexing is all that great due to the fundamental belief that an investor can do substantive amount of work and likely come up with better results. We know it is not easy, and it does not work every quarter, but we believe it can work over the long haul.

The geopolitical and global macro situations are difficult, which means there are shocks that will be coming. The good news this time is that shocks are external sand; they are coming in an accelerating economy that seems to have picked up some escape velocity.

This means that such global macro shocks are likely to be transient and not terminal to the present economic recovery.

Ivan Martchev is an investment specialist with institutional money managerNavellier& Associates. The opinions expressed are his own.Navellier & Associates hold positions inCaterpillar, Chevron, Coca-Cola, ExxonMobil, IBM, McDonald's, Pfizer, and Procter & Gamblefor some of its clients. This is neither a recommendation to buy nor sell the stocks mentioned in this article. Investors should consult their financial adviser before making any decision to buy or sell the aforementioned securities. Investing in non-U.S. securities including ADRs involves significant risks, such as fluctuation of exchange rates, that may have adverse effects on the value of the security. Securities of some foreign companies may be less liquid and prices more volatile. Information regarding securities of non-U.S. issuers may be limited.