“Buy the dip” may be the most overused adage in the history of the markets, but as long as it continues to work, it pays to employ the concept. The rebound from Monday’s low in the S&P 500 index futures is just another example of the trading strategy paying off.
As always, it is not as straightforward to execute the strategy. However, once Monday’s low was established and the subsequent rebound, coupled with the frisky premarket action, those who did not “buy the dip” during yesterday’s retreat were out in full force in Tuesday’s session.
The jawboning by Jerome Powell during his confirmation hearing did not provide the opportunity to buy issues at or near Monday’s low. However, if so inclined, several of the top components of the index could have been purchased at a discount to Monday’s closing price.
For the bargain hunters in the beaten growth stocks, the same scenario was valid and investors were rewarded by the close. With the “buy everything” mentality in the session, the energy sector led by the leap in oil, precious metals, and even Bitcoin caught a bid.
For the session, the index added 42.75 handles to close at 4705 and has already taken back half of the move from last Monday’s all-time high (4808.25) to Monday’s low (4572.75).
Amazon.com (NASDAQ: AMZN) was the biggest gainer of the top components of the index. After being a laggard in Monday’s rally, the issue ended a five-day losing streak by adding $74.28 or 2.3% to close at $3304.
That was over double the cash index’s advance of 0.92%.
Johnson & Johnson (NYSE: JNJ) was the biggest loser of the top components of the index. As the value trade began to lose its luster in favor of growth, the issue was lower for the second day in a row declining $1.84 or 1.06% to close at $171.25.
PreMarket Prep Stock Of The Day: Abercrombie & Fitch (NYSE: ANF)
After the oversized volatility in after-hours trading, the issue found buyers from the opening to the closing print. Read more about ANF here.
