The S&P 500 and Dow Jones industrial average are trading at all-time highs. But rather than cheering the records, bullish equity strategist Tony Dwyer of Canaccord Genuity says they actually give him pause.
After markets hit fresh records, "you just want to wait a little bit to be more aggressive," he said.
And it's not acrophobia—the facts back up his reticence.
Examining recent market history, Dwyer found that "over the last year and a half, initial new highs in the S&P 500 have led to better buying opportunities in the market. The average drawdown after the S&P made a new high is 3.7 percent."
That is, looking at recent instances of new closing highs, Dwyer found that they tended to be followed by a drop lasting an average of 36 days. The worst of these dips, in August, took stocks down 6.5 percent. Meanwhile, the mellowest, in April, saw the market consequently fall 1.7 percent.
Either way, Dwyer's message is clear: Traders should avoid the temptation to chase splashy records.