July 24, 2016
THEY ARE ONLY EVER DIPS:
Buying the Deepest Stock Dips in 2016 Returned Three Times S&P 500 (Oliver Renick, July 24, 2016, Bloomberg)
The buy-the-dip strategy that's been a hallmark of the U.S. stock rally is outdoing itself in 2016, where buying stocks in the most extreme state of free fall is paying like rarely before. An index tracking shares in the Russell 3000 Index that register as "oversold" on a momentum metric is up 28 percent, according to data compiled by Bloomberg.The durability of strategies focusing on momentum reversals is a gift to traders who've been otherwise hamstrung in a market that just spent 13 months going nowhere before breaking to a new high earlier in July. From the 11 percent decline in first two months of the year to the 5.3 percent drop after Brexit, U.S. companies have been quick to shake off losses tied to the economy, earnings and global turmoil.
Every over-arching economic trend is positive for the U.S.. Perhaps the most hilarious example of "bad news" that markets have sold on the pasty few years being declining energy costs.
Posted by Orrin Judd at July 24, 2016 10:05 AM