It’s not time to buy the dip just yet. The S&P 500 was higher on Tuesday, a day after the broad market index posted its worst day in nearly two years amid rekindled recession fears. The broad market index lost 3%, its biggest one-day drop since 2022. The Nasdaq Composite fell 3.4%, falling deeper into a correction. .IXIC 5D mountain Nasdaq Composite That doesn’t mean it’s time to pile into stocks again. Many market watchers have yet to see the sell-off clear, as they expect stocks to have a way to go before bottoming out. “Have we seen the worst?” Thomas Salopek, head of cross asset strategy at JPMorgan, wrote Monday. “We’re looking at the history of the bottom signals, which suggest there’s more pain ahead.” The current pullback has all the hallmarks of a market correction, the strategist said. Among these are the re-sloping of the yield curve, as well as defensive leadership. However, the markets have yet to get the “full set of ingredients” for a market bottom, including a flattening of the slope for the 20-day moving average, as well as an improvement in the market range. “Regardless of whether worsening unemployment is confirmed by the next jobs print in four weeks, we suggest using risk-based technical signals to manage the position,” Salopek continued. “For now, it’s too early to look to buy a dip in the market.” Mark Malek, chief investment officer at Siebert, said investors should wait for a bottom before rushing back into stocks. “We often say this to clients, which is, ‘Better to leave a little money on the table than money down the drain,’ right? So don’t be too quick to try to catch a falling knife,” Malek said. “Hold until the market catches and starts to come back, then you can start nibbling and getting back in.” “At this point, there’s no reason to try to pick the bottom for cash on the side,” Malek added. CFRA’s Sam Stovall, who expects the S&P 500 to undergo a 10% to 15% pullback, said he expects more bulls to capitulate before the correction ends. “People have to test their beliefs to be willing to sell, and that’s what’s happening right now,” Stovall said. “A lot of people are saying ‘well, you know, I think this market is due to an earnings squeeze, but I really wouldn’t worry about that. I would see it as a buying opportunity,’ Well, if everybody felt that way, who would sell anybody,” Stoval said. “So what happens is there has to be changes in your beliefs or your predictions.” The S&P 500 on Tuesday traded about 7% below a record high reached last month.Strategas’ Chris Verrone agreed that it’s too early to start leaning into the market, saying they’re not yet “deeply oversold.” .Besides, he said, it’s hard to think of a market correction happening in August, when historically it’s more likely to occur in the month of October “It might have been easier if it was October, but we’re honestly struggling to think of many markets that made their corrective lows in early August.”
