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In a report earlier this term, JP Morgan highlighted the strong ‘buy the dip’ mindset amongst retail investors. This sentiment has remained strong until now, despite the shift in trends that we have observed since January. The signal has not been clearer; the 50-day moving average on large tech stocks such has Microsoft has began to dip the other way.

We are far from reaching the bottom. History has taught us that conventional bear markets cycle through distinct phases; ranging from denial, hope, fear and disgust. Bear markets end when investors are disgusted, having shifted a larger proportion of their portfolio into safe havens such as cash or gold. Nvidia provides a good example of this narrative. The stock has dipped by around 30% after the momentum shifted in January; highlighting the dangers of blindly buying the dip without knowing where the end lies.

As we reach true bottoms, the disgust phase will be triggered. Here, investors won’t want to own the stocks at all and are weary of any risky assets. Therefore, the best thing to do now is wait. Only when the momentum of the 50-day moving average – an investor’s best friend – swings the other way, then will true buying opportunities materialise.