“Buy the dip” has been a rewarding strategy for much of this long-running bull market in the past decade, but there’s something investors need to know.
“A world where leading indicators are accelerating is generally one where a correction in equities is an opportunity for investors and ‘buying the dip” gets rewarded. In contrast, today’s backdrop with PMIs (purchasing managers indexes) in the low 50s and rates arguing for further declines often results in buying the dip being a losing proposition,” wrote UBS strategists Francois Trahan and Samuel Blackman, in a Tuesday note.
PMIs are survey-based indicators that measure private-sector business activity. In the U.S., the Institute for Supply Management’s readings, particularly the manufacturing index and its components, such as the new-orders sub-index, are closely