During bull markets, Wall Street traders like to “buy the dips.” This mantra was the order of the day, literally, when I was a hedge fund trader during the tech bull of the 1990s. Over the past year, the buy-the-dip philosophy has served traders well, as stocks have largely rebounded from every minor incursion into the red.#-ad_banner-# Now, however, the market is experiencing much more than mere dips. Today, we are getting something akin to “air pockets,” meaning we are seeing some very sharp sell-offs in stocks in reaction to the news. The latest of these… Read More
During bull markets, Wall Street traders like to “buy the dips.” This mantra was the order of the day, literally, when I was a hedge fund trader during the tech bull of the 1990s. Over the past year, the buy-the-dip philosophy has served traders well, as stocks have largely rebounded from every minor incursion into the red.#-ad_banner-# Now, however, the market is experiencing much more than mere dips. Today, we are getting something akin to “air pockets,” meaning we are seeing some very sharp sell-offs in stocks in reaction to the news. The latest of these air pockets came during Wednesday’s trading, as the market dropped sharply on the Federal Open Market Committee’s release of its October policy statement before rebounding off the session lows. The culprit here was fear that the Federal Reserve still hadn’t ruled out the possibility of a December tapering of its current $85 billion-a-month bond-buying program. Basically, I think traders got a little too complacent over the prospect of the Fed holding off tapering until 2014. The possibility, however remote, of a taper in December caused some skittish money to cash in. Still, there are a lot of underinvested money managers… Read More