Not The Onion: “Fed Is Jeopardizing The Buy-The-Dip Trade”, BofA Warns

Jon Alternative Media, Blogosphere, Economy, Fiscal Policies, Market Commentary, Technical Analysis

Conceived several years ago, “buy the (fucking) dip” was a joke among traders seeking to explain the market’s nearly-instant upward mean reversion, which as we have alleged since 2009, has been pushed higher by central bank policy and various HFT strats. Since then it has, sadly, become perhaps the only “explanation” for the behavior of the most bizarre market traders have ever encountered.
Luckily, the buy the dip quote-unquote “market” may be about to end, perhaps as soon as tomorrow, if Bank of America is right.
In a note titled “Reasons to increasingly fear, not love, the dip“, BofA analyst Nitin Saksena writes that a “faster US rate hiking cycle jeopardizes the buy-the-dip trade.”
His observations will be familiar to anyone who has tried to top-tick the S&P over the past 8 years, to short stocks, or to otherwise do anything besides “buy” (the dip):
Saksena writes that a “buy-the-dip mentality is dominating US equities as Fed put has become self-fulfilling. It has now been 104 trading days since the S&P 500 last fell by more than 1% (on a close-to-close basis), a stretch of calm in US equities not seen since 1995.

This post was published at Zero Hedge on Mar 14, 2017.