Last night I posted that today would be critical for this market’s buy on the dip reflex. Yesterday’s move up after the Wednesday rout wasn’t convincing, I noted, and a retreat today would have raise doubts that the long-standing buy on the dip conviction that has kept this market from even the whiff of a correction was still intact. As long as traders and investors treat any dip as an occasion for buying, it will be extremely difficult for this market to build up any downside momentum.
So far, I’d say that today’s market action is a very strong vote in favor of the continued working of the buy on the dip reflex.
The Standard & Poor’s 500 index was up 0.85% as of noon today. The more volatile NASDAQ Composite was ahead 0.75% and the small cap Russell 2000 was higher by 0.57%.
The CBOE S&P 500 Volatility Index (VIX) continued to give back Wednesday’s 46% jump with a drop of 18.08% following on yesterday’s smaller move lower.
The Brazilian stock market, which had crumbled on news of political bad deeds surrounding the country’s president, rebounded with the iShares MSCI Brazil Capped ETF (EWZ) ahead 6.7%. That helped emerging markets climb–the iShares MSCI Emerging Markets ETF (EEM) was up 2.15%
Some of this morning’s gain was a result of very positive earnings from Deere (DE) and a big move up in the price of oil–West Texas Intermediate was higher by 2.17%. But the reasons for a strong buy on the dip reaction today are less important than the presence of the reaction itself.
Now let’s see if the market can hold these gains in the afternoon.
