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If you’re running for the exits, worried that the ECB is all talk and no action, pro trader Guy Adami, managing director of stockMONSTER.com, thinks you’re trading the market all wrong.“Come on. We’ve seen this 50 times over the past few years,” says the pro. "A negative headline out of Europe takes us down 20 S&P handles."Indeed the latest developments from Europe dragged the S&P lower and sent the Dow tumbling by triple digits.The catalyst was ECB President Mario Draghi who disappointed investors.
The Street had been hoping for bold actions such as an aggressive stimulus program since Draghi's pledge last week to do 'whatever it takes' to defend the euro. But, instead, Draghi said any new action was conditional on euro zone governments using their bailout funds first.“We almost always go down on headlines like this,” Adami says. And time and again the trade has been to buy the dip. “A few days after a headline like the one we got today -- we go up. And I don't think that trend will stop anytime soon.”Part of Adami’s thesis stems from his belief that the S&P is the proverbial good house in a bad neighborhood. That is, investors are almost compelled to buy US stocks; it's one of the few investments that generates return amid relative safety.
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