Buying the Dip

For several years, buying the dip was the obvious thing to do. It even had its own YouTube video. But, lately, big meltups into the close have been a trap — at least until the next one comes along. Yesterday’s action in oil futures (CL) was a classic.

A 4.7% plunge turned on a dime as stocks opened, and rallied 3.1% all the way until the moment they closed. It was enough to erase a nice loss on the day and drive ES 16 points higher off its morning lows. It’s plunging again this morning. Rinse and repeat? Or, are folks waking up to the disastrous Japanese fiscal developments (another downgrade on the way) and the continuing meltdown in OPEC and wondering “why buy this particular dip?”