Buying the Dips?

I have read some articles that ask "Which stocks are you buying the dips?" Unfortunately, I do not think these are dips people should be looking to buy. Maybe some stocks will go up, but after seeing most of the indices going into a bear, you may want to hold off on buying. The bull has raged for the last six years, and earlier dips were great opportunities to buy. However, these dips do not have the same feel as the other ones. The last dip, in October 2014, was one that you could feel the market was going to brush off.

This time it is different. The market has been in a range and unsure of what to do. It is skittish. Any news related to finances or economies spooks investors, and sends the market up, then back down again. If this were a case of buying the dips, the market would have already gone back up. Let's take a look at AAPL:

You can see that AAPL has been in a range for most of the year, like the indices. You can also see that the price fell through the bottom of the range and fell a little more than 5%. The important thing to look at is volume. The volume in the red circle shows that a lot of stock changed hands that day. When that happens you can insinuate that a lot of people think the price will fall, and they are trying to take as much profit as possible. 

From its peak in mid-July, the price has fallen about 15%. By definition it has had a correction. I think what will happen from here is that the price will stay around the $115 region, fluctuating between $112 - $120. It will continue that for a while, maybe until September, after we know if interest rates rise or not.

Another stock that has corrected is DIS:

This stock, we can make a case for buying the dip. We see it has a pretty strong trend until the earnings report, there was something that investors did not like. Towards the end of the trend you can see that the price took a new angle and went up. This is actually a bearish sign that marks a correction or a trend reversal. This could be an opportune time to buy, however, I would wait. You would want to wait for a confirmation that this is just a correction and nothing more. 

As you can see there are two types of corrections, ones that can lead to a bull, and others that lead to a bull. AAPL has the formations that would lead you to assume that this may be more than just a correction; while the sudden fall from DIS can be a correction returning to a bull. Make sure you set your stops, and follow your rules.