Study: the "buy the dip" mentality is still strong, which is bullish for stocks


The stock market’s “buy the dip” mentality is very strong right now.
The S&P 500’s pullbacks are becoming smaller and smaller, while the S&P 500 has started to break out.

Netflix tanked -13% yesterday on its earnings report after the market closed, but has clawed its way back to -5%.

As a result, the NASDAQ gapped down more than -0.6%, but reversed and closed at a new all-time high.

Here’s what happens next to the NASDAQ (historically) when the NASDAQ opens down at least -0.6% and closes at a 1 year high (i.e. reverses due to “buy the dip”)

Here’s what happens next to the S&P 500 (historically) when the NASDAQ opens down at least -0.6% and closes at a 1 year high.

Click here to download the data

Conclusion

As you can see, the stock market usually continues to go up when its “buy the dip” mentality is strong.
This is a short term (2 weeks forward) bullish sign and medium-long term bullish sign. This study suggests that the S&P 500 will probably get close to making new all-time highs within the next few weeks.
Click here for more market studies.

Leave a Comment