Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

The Perils of "Buying the Dip" in U.S. Stocks

Stock-Markets / Stock Markets 2016 Jan 14, 2016 - 02:37 PM GMT

By: EWI

Stock-Markets

Legions of bargain hunters have suffered losses by buying stock market dips at the start of bear markets.

Making matters worse, they decimate their portfolios by continuing to buy all the way down, only to capitulate at the bottom.

This chart and commentary is from Elliott Wave International's April 2001 Financial Forecast:


"If there were ever a testament to the importance of market timing, the NASDAQ over the last year is it. Anyone who bought into the euphoria at the all-time high or the bull trap highs of early September and late January, would have taken successive hits of 40%, 47% and 38%. You can bet that many people followed the “buy” advice in the media on every bounce, losing even more than the “hold-only” loss of 65% from top to bottom."

And, bear in mind, the NASDAQ continued to fall into October 2002, handing even deeper losses to investors who continued to buy on the way down.

Let's now shift to the Dow Industrials and consider the market volatility that kicked off 2016. In the first week of trading, the Dow surrendered 6.1%, the worst start ever for the senior index and the worst week since September 2011.

Even so, here's the sentiment that was expressed in a prominent financial publication:

"Where are all of the long-term investors? Why isn’t anyone buying the dip? Many good stocks are trading at far better prices than in recent months, and they can be had at even better prices with some legerdemain." (Barron's, Jan. 9)

Through January 13, "U.S. stocks are now off $1.77 trillion…since the start of 2016." (CNBC)

The bigger the dip, the bigger the opportunity?

Some keep saying -- yes. But our analysis suggests that caution, not buying the dip, is the best approach at this juncture.

Here's an excerpt from Elliott Wave International's just-published January Financial Forecast:

"According to the conventional view, 2015's decline was a small downward blip in a bull market that will soon resume.

"The Elliott Wave Financial Forecast's view is the opposite: 2015 was a key transition year."

That's just one small part of this new 10-page issue. It's packed with 12 must-see charts and countless more insights that only Elliott wave analysis can provide you with.

Your Free 2-Week Trial Offer

Put the risk on us. Try The Elliott Wave Financial Forecast Service 100% free for the next two weeks -- and experience the benefits of being a subscriber! You get all recent issues, a library of free investor and trader reports, special video presentations and more.

For the next 2 weeks, start of 2016 on the right foot with:

U.S. Short Term Update (Mon, Wed, Fri)

You'll get forecasts for the markets' turns each Monday, Wednesday, and Friday, after the markets close. Extensive Elliott wave charts and commentary include stocks, bonds, metals, and the U.S. dollar. Also includes occasional special opportunities for stocks that look poised for major moves. 

U.S. Elliott Wave Financial Forecast (Monthly)

Tracks intermediate-term patterns in the U.S. markets and forecasts upcoming price movements. You get monthly wave analysis of stocks, bonds, metals, the U.S. dollar and economic and social trends.

 

The Elliott Wave Theorist (Monthly)

At least once per month, you'll also get Bob Prechter's cutting edge view into when, where, and why the waves are unfolding in the broader market. Each Theorist provides unparalleled insight into the sociological and psychological signals in the marketplace.

Your only risk is being challenged to a new view of the markets and investment strategy.

Yes! Start my 2-Week Risk-Free Trial now >>

 

 

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

 


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules