A Nasdaq pullback can be healthy or dangerous depending on how leaders behave. If the strongest stocks hold higher lows and breadth stabilizes, the pullback may reset the trend. If leaders start failing one by one, the correction can become wider.
I like to watch three things. First, does the index hold a prior breakout zone? Second, do leading stocks hold relative strength? Third, does volatility calm down after the first selloff? If all three improve, I become more interested in longs.
The mistake is buying every red day only because the market was strong before. Momentum markets can stay strong for a long time, but when they break, they punish late entries.
For now I would build a watchlist instead of forcing trades. The best names often reveal themselves during weakness because they refuse to break with the rest of the market.
I like to watch three things. First, does the index hold a prior breakout zone? Second, do leading stocks hold relative strength? Third, does volatility calm down after the first selloff? If all three improve, I become more interested in longs.
The mistake is buying every red day only because the market was strong before. Momentum markets can stay strong for a long time, but when they break, they punish late entries.
For now I would build a watchlist instead of forcing trades. The best names often reveal themselves during weakness because they refuse to break with the rest of the market.
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