While I certainly don’t believe that markets have to obey math, it’s very clear that investors have taken on a very familiar pattern of what I’ve called “increasingly immediate impulses to buy the dip” and what physicist Didier Sornette would call a “log-periodic bubble.”
That constant and more immediate tendency to buy dips is a signature that is difficult to entirely dismiss. In itself, it doesn’t always lead to unfortunate outcomes, but in the context of rich valuations, overbullish sentiment, and global economic headwinds, it is worth monitoring. As Barron’s Magazine noted in early 1969, just before the market lost a third of its value in the 1969-1970 plunge
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