A week that could have been a nightmare instead finished like a dream.

The Dow Jones Industrial Average climbed 456.91 points, or 2%, to 23,328.63 last week, while the Standard & Poor’s 500 index rose 0.9% to 2575.21. The Nasdaq Composite advanced 0.4% to 6629.05.

For a while there, though, it looked like it could go either way. On Thursday—the 30th anniversary of Black Monday—the Dow briefly traded down more than 100 points, raising concerns of a repeat. But the market rallied back to close at a new high, and the decline became just the latest example of investors buying the dip.

It wasn’t just the market that saw dip-buying. Shares of General Electric tumbled 6.3% in early trading on Friday after the industrial giant slashed its full-year profit guidance. Investors, betting that the worst was over, pounced, and GE’s shares finished up 1.1% on the day. “It’s another microcosm of buy-the-dip,” says Scott Clemons, chief investment strategist for private wealth management at Brown Brothers Harriman.

For investors, there’s little evidence to suggest dips in the market shouldn’t be bought. Earnings have been solid.  How those earnings and sales continue to play out could go a long way toward determining whether the market can continue its long trek higher, especially with tech giants like Amazon.com (AMZN) and Alphabet (GOOGL) reporting on Thursday. “If tech continues in a great way, the market can head higher,” says JJ Kinahan, chief market strategist at TD Ameritrade.

Still, it took more than earnings to push the market higher last week. On Thursday night, Senate Republicans agreed to a budget framework that could allow a tax package to pass with only a majority of votes, rather than a filibuster-proof 60. That helped the Dow gain 165.59 points, or 0.7%, on Friday.

“We still say the line to tax cuts won’t be a straight one,” Michael Block, chief strategist at Rhino Trading Partners, wrote in a note to clients last week. “Optimism that this gets done quickly and without controversy is bubbling.”

But not too much optimism, as the market still refuses to get too excited by anything. The Dow, in fact, hasn’t gained more than 1% on any single day since Sept. 11, and yet it’s managed to hit 53 new highs this year, the most since 1995. “It’s the market equivalent of three yards and a cloud of dust,” says Brown Brothers’ Clemons. “It’s just one slow grind upward.”

(Source: Barrons Online)