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PUBLIC: Buy the dip still the play

The markets are getting interesting!  Friday saw a FANG sell-off on the NASDAQ where a handful of individual stocks moved down about 3% to drag some of the market lower (FANG stands for Facebook, Amazon, Netflix, and Google).  However, the selling on Friday received nearly ZERO follow through to the downside on the following Monday.  There has been continued upside in other indices, reaching all time highs again outside the NASDAQ.  Friday’s “event” in the FANG stocks is just another one day sell off (so far) and the Pavlovian instinct to “buy the dip” has paid off again for investors and traders.

My short term indicators so far haven’t shown any specific indications that more downside is imminent.  Are conditions ripe for more downside?  Yup.  Instability in the market is increasing.  However, so far, sell offs of any kind are met with buyers stepping in and lower prices do not recruit new selling.  In markets trying to sell off, lower prices recruit new sellers.  Isn’t happening right now.  The long term trend is up, the intermediate trend is up, and the short term trend is up.  If this over-exuberance in the market is making you uncomfortable, time to trim your positions a little bit.

When will this run end?  The first sign will be a lower low followed by a lower high.  So far, that hasn’t happened.  Hard to start a downtrend until that first lower low and lower high is created.  Keep that in mind.  Good luck.  Follow the trend.