Need anymore evidence than the stock market action yesterday and today?
Yesterday, October 13, with the Standard & Poor’s 500 down for three straight sessions and the index lower by 4.1% from its September 2 high, the market reversed. Suddenly everyone wanted to buy risk again. The most momentum-y of momentum stocks tacked on 4% or more. CrowdStrike gained 7% on the day. Veeva Systems (VEEV) added 4.55%. SentinelOne (S) moved up 7.5%. Even China’s internet giants showed big gains with Tencent Holdings (TCEHY) up 3.62% and Meituan (MPNGF) gaining 4.43%.
Today, October 14, investors and traders piled in to pick up the momentum favorites that had been left behind, relatively, in yesterday’s risk-on move. As of 3 p.m. New York time Nvidia (NVDA) up “only” 1.30% yesterday was ahead 3.32% today. Applied Materials (AMAT) u only 1.14% yesterday was up 2.78% today. PayPal (PYPL), which gained just 0.20% yesterday, higher by 4.13% today
Commodity stocks continued their rally with Southern Copper (SCCO) gaining 6.40% today and Freeport McMoRan Copper & Gold (FCX) up 4.48%.
And industrial stocks that no one wanted to buy yesterday are seeing big gains today with Dow (DOW) up 3.13% and DuPont (DD) gaining 3.16%. Caterpillar (CAT) was higher by 2.80%.
There’s certainly a big element of FOMO in today’s rally. If stocks are really going to party like its 2020 and early 2021, no one wants to be in the sidelines.
But not all buy on the dip rallies are the same. And buy on the dip markets can be radically different.
I’d argue that this one is especially complex with lots of currents and counter currents.
For example, even in the short term, stocks are looking at an earnings season that will show strong growth but with lots of warnings and guidance cuts.
In a slightly longer term, investors and traders are puzzling over how to price in monetary policy changes from the Federal Reserve–and on what schedule.
In a longer time frame, there’s evidence that global economic growth–and especially growth from China’s economy–is slowing. But no long knows by how much or whether or not a slowdown in China will trigger some more big event in emerging markets, commodity markets, or debt markets.
I’d argue that the 4% plus drop from the September 2 high and the even bigger drop in technology stocks from their September 16 high isn’t the last buy on the dip opportunity that we’ll see.
And that the strong rally of the last few days is the last rally after a dip that we’ll see in the next couple of months.
That’s why in the next few days I’ll be posting a new Special Report: 3 Strategies and 10 Best Buy on the Dip Picks on my JubakAm.com subscription site that will lay out the risks of three buy on the dip strategies, the best timing for each, and 10 stocks that will generate the biggest profit from executing each.
In addition, over the weekend–for posting on Monday–I’ll be revising my Dip-O-Meter on that site with new stocks to track and buy when the time is right.
Please tune in
