Hey, Ross here:
The strong bull market of the past few years has “trained” many people to just keep buying the dips.
As a whole, that’s been a pretty good play.
But when do you NOT want to buy the dip?
Today’s chart explains it.
Chart of the Day
This is IGV – the Software Sector ETF – which has been absolutely hammered this year on fears of AI eating their lunch.
It’s now trading at close to the April lows…
Which has gotten many investors salivating about “buying the software dip”.
And as the data shows, retail investors have indeed been buying into software.
But software stocks are barely budging.
The most likely reason is because at the same time these retail buyers are piling in…
The institutional “smart money” is still dumping their positions.
This is the kind of dip you want to avoid…
Where retail is buying – but the institutions are dumping.
And there’s one more critical thing you need to remember about these institutions.
I explain more below.
Insight of the Day
Remember, most institutional investors do NOT have the ability to go to cash – which means they’re always buying something.
Institutional investors dump their positions all the time.
But unlike you and me, most of them lack the ability to just go to cash and wait on the sidelines.
They’re constrained by their mandates.
An equity fund manager can’t just decide to hold 50% cash – or even bonds. It’ll never fly with the investment committee.
And it might even earn them an investigation from the regulators.
No, if they’re an equity fund, they must stay largely in equities.’
Same goes for things like pension funds – no way their committee will let them just sit in cash.
And that means that – even if they’re dumping some positions…
They’re always buying others.
That’s the opportunity – following their buys, so you can use their money for your profit.
Of course, they don’t broadcast to the market what and when they’re buying.
But they almost always follow certain patterns when they buy.
Very few people know about these patterns.
But as someone who worked for the largest bank on Wall Street, I’ve seen it firsthand.
And when I left, I created an entire strategy around following the smart money “footprints”.
I went LIVE yesterday to break down this strategy – as well as revealed details of some of the top trades these institutions are piling into right now.
If you missed it – you can click here to check out the limited-time replay.
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He encouraged questions and shared valuable insights that I applied immediately.
He has a deep understanding of the stock market and explained his analytical methods in a way that was easy to grasp, even for beginners.
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Editor, Stock Surge Daily
