One of Wall Street's most famous proverbs of this bull market is backfiring.
"Buy the dip," or picking up a stock or the whole market when they sell off, isn't working for the first time in 16 years, according to analysis from Morgan Stanley. The investment bank looked at the average return for the S&P 500 if the previous week was negative and found that this year, there was no rebound.
"Buying the dip has not worked in 2018 for the first time since 2002," Morgan Stanley equity strategist Michael Wilson said in a note to clients Monday. "Such market behavior is rare and in the past has coincided with official bear markets (20 percent declines), recessions, or both."
The strategy worked even during 2008 and 2009, the height of the Financial Crisis, Morgan Stanley said. But a key factor makes this cycle different, according to Wilson: Quantitative easing is turning to quantitative tightening. The Fed is now reducing its balance sheet while the European Central Banks and Bank of Japan taper their own quantitative easing programs.