Technical analyst warns against making a classic investment mistake


The S&P 500 has risen 20 percent in the past year, leaving some investors nervous about committing money at levels that appear to be elevated.

But those who insist on waiting for a dip before buying in are doing it wrong, says Chris Verrone, technical analyst at Strategas Research Partners.

"This is an uptrend, this is a bull market, and this is how they behave," Verrone said Wednesday on CNBC's "Trading Nation." "The mistake here is waiting for the pause or the pullback."

To be sure, the recent rise has offered little opportunity for dip buying. The S&P 500 hasn't suffered a one-day drop of 1 percent or more since October.

Perhaps the best opportunity, then, had been the period from mid-December to late January, when the broad market did almost nothing.

It could be "that the pause everyone wanted was just a pause in time," Verrone mused.

To be clear, his point is not that stocks won't see a dip, but simply that missing out on a bull market by waiting for one is a poor strategy.

"There will be a pause or a [pullback] at some point, but we can't position for it," Verrone said. "I think it's more important that we participate."

Noting the lack of a recent drop, Gina Sanchez of Chantico Global said Wednesday on "Trading Nation" that "what's driving this market is sentiment and momentum."

And while she thinks stocks have become overvalued, and that investors have put too much stock in political proposals that may or may not come to fruition, Sanchez said, "the reality could come a year from now, so this [rally] could go for a while."

After rising dramatically to a record high Wednesday, the S&P slipped a bit in Thursday trading.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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