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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.

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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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