Buy the Dip?
2/7/2018 10:03 AM
Below is a chart of the Dow Jones Industrial Average (DJIA):
Green circle – stochastics dropped to oversold, and bounced right off – good sign
Blue circle – yesterday the DJIA dropped below, but held onto the support level of 23,900 – good sign
Orange circle – yesterday had massive trading volume on an up day – good sign
What to expect?
Probably continued volatility
What to do?
Nothing, stay the course, that is a decision
Dial down, if you are concerned – call our office
Buy the dip, if you think stocks are on sale – which is what I did with my own money yesterday morning, call our office
A comment below on investor psychology
When there is a downturn in the market, investors look at their accounts based on their high-water-mark vs. their current value
For example, the S&P 500 index is now:
-6% off its 52-week high, but
+19% above its 52-week low
It is common for investors to think, wow, I lost 6% -- they don’t think, wow, I am up +19%