Tech Stocks Rebound: "Buy the Dip" Mentality Remains Strong
Recent market shocks have revived the familiar "buy the dip" strategy among tech investors. After a 4% drop in small-cap stock futures following tariff fears, nearly all losses were recovered by Tuesday. Similarly, AI concerns that led to a 17% decline in Nvidia (NVDA) were met with aggressive buying, including a significant inflow into the GraniteShares 2x Long NVDA ETF (NVDL), which amplifies the underlying stock's daily returns.
Vanda Research reports a surge in retail trader activity during the Nvidia sell-off, with approximately $4.25 billion in new capital entering US financial markets. This "buy the dip" mentality has become ingrained after years of favorable market conditions and rapid rebounds.
Despite market sensitivity to event risk, as evidenced by the DeepSeek and tariff developments, the dip-buying optimism remains strong. Market strategists anticipate potential volatility due to an active president in the first year of his term and a high volume of market-moving headlines. However, the recent rebound underscores the persistence of the "buy the dip" strategy among tech investors.