Do Dips Make You Nervous?

Yesterday we saw SPY dip.

Seasonality says that investors pull money out of the market at this time of year to pay their tax bills.

We haven’t seen many painful dips since 2022, so this may feel like the sky is falling after months over months of up, up, up.

Pullbacks are normal, and we're long overdue for one. If your emotions are reacting to this, it might be time to evaluate how realistic your expectations are.

We are approaching earnings on much of the Mag 7 next week.

Options premiums on those with earnings next week are huge. Huge premiums signal increased risk, but this risk can be managed with good strategy and patience.

I love trading a system on earnings, but this is one quarter it doesn’t always work as well as the others.

Why?

Again- we have people pulling money out of the market to pay their taxes. That means there isn’t much capital on the sidelines to buy dips and pump stocks.

Patience is key here.

One place where there has been a more significant pullback is in the semiconductor space. This industry is due for a consolidation period, and this is a healthy freeze that was long overdue.

If you've gotten into these stocks because the premiums are large; you now get a lesson on what it feels like in a pullback. Take this time to make notes of your trades. Reflect on the results later. Did you like the experience of trading a volatile stock or not? Time will pass, you'll gain experience and you'll have a solid answer.

Once again, patience is key.