The “Buy The Dippers” Win Again

If I could play an instrument (I can’t), I’d start a band. I’d call that band Buy the Dippers. I can already hear the DJ—Tom Morello, because I’m not a traitor to my generation—coming on the mic as the song fades out: 

“...and that was Buy the Dippers, topping the charts once again.” 

From there, we’d go on to win every award in the industry. We’d never, ever, get played out. Our clips would probably trend on Instagram and TikTok. 

In case you haven’t figured it out, I’m modeling my imaginary band after the U.S. stock market, which hit a new all-time high last week after yet another lightning-fast recovery. 

S&P 500 

To appreciate the speed of this move, we pulled historical data on the S&P 500 going back to 1950—specifically, instances where the index experienced a 20%+ drawdown (close to low) and then tracked how long it took to recover to new highs. 

The latest recovery? Just 57 trading days. That beats the 1998 comeback following the Russian debt crisis and the collapse of Long-Term Capital Management. 

Source: Optuma (Chart) & Norgate (Table)

NYSE Advance/Decline Line 

The NYSE Advance/Decline Line continues to improve after breaking its downtrend, pushing toward its own new high. Should it get there, it would be strong confirmation that the bullish S&P 500 trend is on solid footing. 

Worth noting: the One-Year Stochastic of the A/D Line has moved comfortably back above the 80-level, a sign of renewed momentum. 

Source: Optuma

Dow Jones Transportation Average 

Naturally, since my band will be topping charts, we’ll fly private—so we won’t be adding much to the Dow Jones Transportation Average. Still, we can’t help but notice that this index is on the mend. 

Last week, it reclaimed its 27-day moving average, even in the face of disappointing news from heavyweight constituent FedEx Corp (FDX).

Source: Optuma

InterInternational Stocks

And no, my band’s success is not limited to the United States—Buy the Dippers are global chart-toppers too. 

The MSCI ACWI ex-U.S. Index Fund closed at record highs last week and remains firmly in a strong bullish trend. 

Source: Optuma

Final Note

As amusing as the music metaphor may be, the price action is serious: breadth is improving, transports are stabilizing, international equities are participating, and the S&P 500 is setting records at historic speed. The Buy the Dippers keep topping the charts—and for now, they show no signs of stopping. Perhaps this will last much longer, or maybe it will change soon but our composite models are robust to both trend and mean reversion. 

Have a Safe and Happy 4th of July week in the U.S.

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