Warning: Buying The Dip Just Failed

Warning: Buying The Dip Just Failed

"Meaningful setbacks." That's how BofA's equity derivatives team described recent stumbles for US stocks, which have gyrated in the weeks since options expiry amid a laundry list of macro catalysts including perilous brinksmanship inside the Beltway and fears of a spiraling property meltdown in China. For the first time since June of 2020, the S&P moved 1% or more in four consecutive sessions (figure below). The accompanying rise in realized vol "triggered" what had become extreme loadi
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3 thoughts on “Warning: Buying The Dip Just Failed

  1. “Although it’ll take more than one unprofitable counterexample to break the spell, failing to deliver a treat after ringing the bell confuses the dog.” I subscribe for the great and informative content, perfectly placed sarcastic humor is just icing on the cake.

  2. “At some point, the animal will dissociate the sound from the food.” My sophomore Psyc prof was a staunch behaviorist. Part of his PhD researched involved training pigeons to respond to a light to get food. He trained them using something known as variable interval reinforcement. Once trained he removed the reinforcement and started flashing the light with no food to see how long it would take for the pigeons to give up believing in the relationship. Repeatedly, his pigeons would exceed 80,000 empty responses before they “disassociated.”

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