To The Moon

The Nasdaq and S&P 500 have shown continued strength, and while August is historically more volatile, it often ends on a positive note. However, this does not preclude the possibility of a short-term pullback—especially after four consecutive months of gains.

Could August Bring a Major Pullback?

Yes, it is possible. Key reasons include:

Seasonality: August is known for lower trading volumes due to summer holidays, which can amplify volatility.

Macro Events: Earnings season, inflation data, interest rate expectations, and geopolitical developments may act as catalysts.

Technical Overextension: After a strong rally, markets may need to consolidate or correct to digest gains.

If a Pullback Occurs, Are You Ready to Buy the Dip?

This depends on your:

Investment horizon: Long-term investors may welcome a pullback as a buying opportunity.

Liquidity: Having cash or equivalents ready allows you to act decisively.

Conviction in your strategy: Do you have high-conviction names you’re willing to add to at lower prices?

Can You Afford a Big Swing?

Volatility cuts both ways. Ask yourself:

Risk tolerance: Are you emotionally and financially prepared for 5–10% drawdowns?

Portfolio diversification: Is your portfolio sufficiently balanced to withstand short-term moves?

Should You Take Some Profits?

Taking profits is not necessarily bearish—it’s strategic.

Trim stretched positions: If certain holdings have run far beyond fair value, trimming may reduce downside risk.

Rebalance: You could rotate into underperforming sectors or increase defensive exposure.

Raise cash: Selling partial positions to build dry powder gives you optionality during a dip.

---

In summary, while August may bring volatility or even a pullback, whether to buy the dip or take profits depends on your strategy, goals, and risk profile. Now is a good time to review your allocations and ensure they reflect your current outlook.