Nobody ever said you have to like a pullback in stock prices. But it's critical to understand 1) why they happen and 2) why they are challenging.
A pullback is considered a moderate drop in prices from recent peaks that occur within a continuing uptrend. The key phrase is “within a continuing uptrend.” In the chart, you can see that since stocks began to trend higher in October 2022, prices have seen two pullbacks in the past ten months. Is August pullback #3?
Pullbacks can be painful because they break trend lines and support levels. Worse, they can cause investors to second guess their strategy. Remember, pullbacks are easy to spot in retrospect, but they can be harder to evaluate when your portfolio is losing value.
After August comes September and October, which have their own reputations on Wall Street. So at this time of year, one strategy might be focusing less on the day-to-day market gyrations and more on other projects. And if you need a quick update on Wall Street, don’t hesitate to call.
A Pullback for Stock Prices in August
August 21, 2023