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Research Analyst

Should you just buy the tech dip?

Should you just buy the tech dip?

NASDAQ retreats from its all-time high as Coronavirus cases in the United States reaches record highs.

States in the South and the West, such as California, Texas, and Arizona, reach record daily highs for Coronavirus cases, hindering their ability to reopen their respective local economies. The United States rose by near 38,670 today. This is on the back Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, warns of a “Disturbing surge” in Coronavirus cases. Massive companies like Apple have closed stores due to the spike, and Disney has delayed the opening of their parks until further notice.

NASDAQ’s drop from 10,300 back down to a low of 9,910 showed that even the tech stocks are not immune to Coronavirus fears. However, big tech is a favorite for many retail and institutional investors loved for their relative immunity to cashflow drawdowns, and tanks like balance sheets may provide possible safe havens for investors who are willing to buy the dip. However, it seems like many investors are eager to buy the dip – like they have been taught to do since the global financial crisis. Over the past couple of weeks post peak COVID lockdown, every headline I’ve seen red headlines on Bloomberg stating “*insert indices here* drops on *insert Coronavirus related problem here*”, they have rebounded in the days following.

CEO's are hinting to buy the dip

With all the coronavirus fears seeping through the market, people are still optimistic about a quick recovery. David Solomon, CEO of Goldman Sachs, stated that there would be an “initial V-shaped recovery,” but noted that long-term recovery is ahead of the United States.

However, the United States is not the only country with Coronavirus blunders. Touted as having one of the best initial reactions to the Coronavirus, New Zealand’s government released information stating 51 out of 55 that were granted compassionate exemptions to leave quarantine were not tested, causing a massive backlash on the government. This has become a significant talking point for the opposition parties as election season nears. The NZX 50 is down 1.16% on the news.

As we start this long-term road to recovery, traders and investors must be aware of an increase in market volatility.

Are you buying the dip?

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