"Never Fear and Buy the Dip" continues to hold the reputation of one of the best strategies we can use to trade in stock indices. What, however, is this time behind this notorious Wall Street phrase?
After sell off, investors began to wonder if the strategy would work again. At the same time, the most powerful fundamental support that all major companies expected was a turning point and an end to the decline in stocks. Considering the tax benefits that Large Cap companies received after the adoption of Trump Tax Plan, the majority of fund managers in these companies undertook share buybacks, which planned even when tax reform was just an idea in the head of Donald Trump. This led to a sharp Pullback of support levels and once again confirmed the success of "Buy the Dip".
Brian Reynolds, a strategist at Canaccord Genuity, follows company buy back plans of SP500. He notes that after the market correction in early February, the intentions of the redemption companies have increased drastically, and in graphical form, the growth is almost vertical.
According to Reynolds, Wall Street's moods are that shares will mark another decline in the next month, which will give companies another chance to push "Buy."
"Buyers are likely to step up the pace in the spring, as currently play it safe and just beginning to accumulate funds for next fall," - said Reynolds.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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