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Market Watch: Sell the Rally Replaces Buy the Dip as Battered Market Enters Critical Week

December 10, 2018

Article by Shawn Langlois in Wall Street Journal Market Watch

Where have all the dip-buyers gone?

After weeks like the train wreck that just passed, investors are supposed to come along and scoop up bargains, no? That’s been the norm for decades, after all. Alas, it’s not the norm any more, as this Wall Street Journal chart shows:

Indeed, the reliable “buy-the-dip” trend that made this market so dependable is gone, with the S&P, on average, failing to rebound following weekly declines this year for the first time since 2002, according to Morgan Stanley.

The start of this week looks no different. Trade-war jitters and uncertainty over the Fed’s direction aren’t helping as stocks take another hit.

The Onion, which says we’re in an “Everest/Mariana Trench pattern,” channeled the White House with its tweet on what we’re seeing:

At any rate, the lack of those aforementioned dip hunters has caused Cantor Fitzgerald’s Peter Cecchini, in our call of the day, to shift his approach.

“Our disposition towards equities has moved from buy-the-dip to sell-the-rally,” Cecchini was quoted as saying in a Bloomberg piece. “If I’m not constructive on the credit markets, then I won’t be constructive on the equity markets.”

And no, he’s not constructive on credit. Cecchini, heralded as one of relatively bearish analysts in 2018, says decelerating U.S. growth and a frothy loan market will keep the credit market under stress as we head into next year.

To read this article in Wall Street Journal Market Watch, click here.

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