The Secret to Playing Pullbacks and "Buying the Dips"

D.R. Barton, Jr.

U.S. markets are trying, without much luck, to rebound from a string of six sessions that, if not exactly bearish, were less than convincingly bullish.

Truth is, all told, over the last five days, the Dow is down just 0.69%.

The last time we saw anything close to this was back in early August. We're still in the thick of the longest streak of trading days without a 3% pullback in the entire history of the S&P 500.

This data goes back 89 years, folks. You'd never know it if you were watching financial news and scanning headlines, but we're still firmly in unprecedentedly bullish territory.

Pullbacks of any real depth are far in the rearview mirror – for now.

That means investors looking to employ the classic "buy the dips" strategy to build positions more cheaply will have to change their game plan a bit.

Let me show you…

Let's Define Some Terms

Market analysts call a 10% price drop in the major indexes a "market correction." 20% is classified as a "bear market."

FACT: You only need to double $500 eleven times to turn it into $1 million. Click here to see more…

But we haven't seen anything close to that level of pullback. Like I said, the market hasn't pulled back as much as 3% in more than a year.

If that sounds like a long time, it is. This is the longest streak of trading days without a 3% pullback since Calvin Coolidge lived in the White House.

Here's a table with the data from Pension Partners LLC showing the longest streaks during that time:

D.R. Barton, Jr.

About the Author

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Nationally recognized technical trader. Background in  engineering, system designs, and risk reduction. 26 years in the markets.

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