Buy The Dip? Experts React To Thursday's Stock Market Plunge

One day doesn't make a trend, but Thursday's trading performance could spell worry for the market.

The Dow Jones Industrial Average fell more than 1,000 points and investors are scrambling to figure out if it's a buy the dip opportunity or a reason to exit ahead of more losses.

Buy The Dip: From a historical perspective, markets are vulnerable to at least four pullbacks of 5% during a rebound period, Piper Sandler Chief Market Technician Craig Johnson said on CNBC. This pullback is one of those scenarios where investors should be buyers of the dip.

Johnson made the call to buy stocks near their lows in March based on the fact the S&P 500 was trading around 25% below a 40-week moving average. That has only happened five times since 1970 and each time it was followed with a V-recovery.

"Every single time you traded between 20, 25 percent below that 40-week moving average, on the advance up you have moved anywhere from 15 and 20 percent above the 40-week moving average before the advance is over," Johnson said.

If history is any indication, the S&P 500 could rise between 3,450 and 3,600 before the move is "ultimately over and complete."

'Fine' To Give Back Some Gains': It's "fine" for the stock market to give back some of its recent gains, Jim Cramer said on "Squawk Box." Shares of "good companies" like Apple Inc. AAPL simply got ahead of themselves.

"There was money congregating in a couple of stocks and those stocks got too high," Cramer said.

Does This Make Sense? One needs to question if it makes sense for the S&P 500 index to be up since the start of 2020 despite 13% unemployment, Alpha One Capital Partners Dan Niles said on CNBC.

Simply put, this "doesn't make sense" and stocks should "definitely" be giving back gains amid record-high valuations.

Related Links:

Paul Tudor Jones Criticizes 'Narrow, Myopic, Transactional View' That Companies Exist Only To Maximize Profits

Weekly Jobless Report Improves As More US Businesses Reopen

Market News and Data brought to you by Benzinga APIs
Posted In: Analyst ColorNewsFuturesTop StoriesMarketsMediaCNBCCraig JohnsonDan NilesDow JonesJim CramerPiper Sandler
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!