A new bull market has begun and is still in the early stages, so buy the dips, top Wall Street analyst says

• The stock market selloff in April marked the end of a bear market, according to Morgan Stanley’s Mike Wilson, who said a new bull market has started. Volatility along the way is normal, and the market will likely cool off in the third quarter, he predicted. But investors should keep buying the dip as the bull market is still in the early stages, he added.

There’s growing concern that the U.S. may be headed for a recession, but Morgan Stanley’s Mike Wilson has said that the economy was actually in a “rolling recession” for the past three years.

It’s over now, and the epic stock market selloff in April, when President Donald Trump shocked investors with his “Liberation Day” tariffs, marked the end of a bear market, he told Bloomberg TV on Thursday.

“Now we’re in a new bull market, and capital markets activity is just another sign that that analysis, or that conclusion, is probably correct,” he added.

Wilson, who is Morgan Stanley’s chief U.S. equity strategist and chief investment officer, said any volatility and consolidation along the way are normal, noting that it’s actually preferable to a market that goes straight up like in 2020.

In fact, the stock market has seen some straight lines lately in form of a V-shaped recovery. At its lows in April, the S&P 500 had tumbled so precipitously and so quickly that it was down nearly 20% from its prior high. Since then, the index has shot up 30%, hitting fresh records and leaving it up almost 9% so far this year.

But Wilson predicted some stock market moderation in the third quarter, potentially offering a chance to double down on the rally.

“I want to be very clear: it’s still early in the new bull market, so you want to be buying these dips,” he said.

Last month, Wilson said in a note that the S&P 500 could reach 7,200 by mid-2026, explaining that he is starting to lean closer to his more optimistic “bull case” scenario.

He cited strong earnings as well as AI adoption, the weak dollar, Trump’s tax cuts, pent-up demand, and expectations for Fed rate cuts in early 2026.

Wilson’s view is part of an increased sense of optimism among other top Wall Street analysts as fears over tariffs ease with the signing of several trade deals.

Last month, Oppenheimer chief investment strategist John Stoltzfus hiked his S&P 500 price target for this year to 7,100 from 5,950, reinstating the outlook he initially made in December 2024.

If the S&P 500 hits 7,100 this year, it would represent a gain of about 21% for 2025, marking a third straight year with a surge of more than 20%. That hasn’t happened since the late 1990s, when the U.S. economy and the stock market boomed.

Meanwhile, retail investors have relentless bought stocks whenever they have dipped, helping turbo-charge the market even as institutional investors have taken a less aggressive stance.

Buying the dip has paid off so well that it’s actually getting harder to do as more investors try to get ahead of the crowd, fueling faster rebounds.

“The half life of dips is getting ever shorter,” Steve Sosnick, chief strategist at Interactive Brokers, told CNBC on Tuesday. “And I think because people are so afraid of missing the dip, they basically rush in at the slightest sign of one.”

He cautioned against reflexively buying dips just because a stock is down, saying investors should instead be more judicious and apply some analysis to find real value.

Still, the risk is that dip-buyers “catch a falling knife” in the process, leaving them with stocks that continue on a long-term decline.

“The market has a way of making the maximum number of people wrong at the most inopportune time,” Sosnick said.

This story was originally featured on Fortune.com