The Smarter Buying the Dip Strategy: Let Structure Pull You Back In

The Smarter Buying the Dip Strategy: Let Structure Pull You Back In

Intermediate rallies matter because they often mark the transition from uncertain conditions to clear opportunity. These rallies tend to be sharp and dynamic, typically powered by improving market breadth, fresh momentum, and a shift in sentiment. Unlike drawn-out trends, these movements are fast and often front-loaded with gains. Being early—or absent—can mean missing the bulk of the move. What makes them most profitable, however, is when they align with rising long-term cycles. That structural harmony amplifies the move, transforming what could be a brief bounce into a sustained rally. We focus on these moments not because they’re easy to catch, but because they’re essential to long-term success. When the signals align, our goal is to be ready—not to chase. It’s a window of strength that doesn’t open often, but when it does, it rewards those who are prepared to act decisively.

When Rallies Align with Long-Term Cycles

But not all intermediate rallies are created equal. The most powerful ones occur when the long-term cycle is also rising. When these two forces align, rallies can stretch far longer than expected, sometimes lasting up to five months or more.

Just look at the chart: whenever the magenta intermediate cycle turns up—and is joined by the rising white long-term cycle, the S&P 500 (shown in the background) tends to experience a sustained, powerful advance. These aren't random bounces. They're structured moves, driven by underlying institutional buying pressure.

This dynamic has repeated again and again over the years:

• After March 2023

• Again in October 2023

• August 2024

• And most recently, April 2025

In each case, being long wasn’t just profitable, it was essential if you wanted to capture the bulk of the move.

Intermediate vs. Long-Term Confirmation

When the intermediate cycle rises alone, we stay nimble—it could just be a relief rally inside a broader decline. But once the long-term cycle turns up in sync, the odds shift dramatically toward a longer-lasting, more reliable rally.

That’s exactly where we are now.

We’ve just completed the first leg of this intermediate uptrend, the early stretch fueled by short-covering, bargain hunting, and technical rebounds. But now we’re entering the phase that really matters, the long-term cycle has turned up after contracting into a deeper low.

This is when institutional flows will continue to reassert themselves. Pullbacks get bought. Dips become shorter-lived. And rallies stretch further than most investors expect.

Letting Structure Guide Strategy

This is where our strategy matters most.

We want to be buyers on dips, holders during rallies, and manage risk with intelligent stop placement. And when stops get triggered, as many did over the past two weeks, we don’t stay sidelined too long. We watch for the 2/3 and 3/5 moving averages to turn up again, and then look to re-enter with fresh momentum on our side.

Yes, projected cycles still suggest some potential downside into early June, and it’s possible this rally stalls out temporarily. But if price holds above key support and the cycle structure remains intact…

• We don’t need to guess, we can let the market pull us in.

By placing buy stops just above the 5 or even 10-day price channel, we can position ourselves to re-enter as momentum resumes. Yes, short-term volatility may still occur into early June, but if price holds above key levels and structure remains intact, we can position ourselves with confidence. As we monitor the evolving setup, understanding accumulation patterns can provide even deeper clarity. Check our post on Spotting the Accumulation Phase Early: What Structure Tells Us Today for more info.

Role of the Price Channel in Timing Re-entries

Price channels aren’t predictive—they’re reactive—but that’s precisely what makes them powerful tools for managing risk in a disciplined way. Steve’s models use 5- and 10-day price channels as natural filters: if the market regains strength and pushes beyond the upper bounds of these channels, it’s a sign momentum is returning.

Setting buy stops slightly above these levels allows us to re-enter only when the structure pulls us in. It’s a strategy that avoids the emotional impulse to “buy the dip” too early, instead waiting for the market to confirm.

How to Adjust Position Size Based on Cycle Phase

One of the most overlooked aspects of disciplined trading is adapting position size according to where we are in the cycle. During the early stages of an intermediate rally—especially when long-term confirmation is lacking—Steve teaches starting small. Risk is still elevated, and structure remains vulnerable.

But as confirmation builds—moving averages turn up, breadth expands, and short-term cycles gain traction—traders can scale in more confidently. This staged approach maximizes reward while keeping downside tightly controlled.

Why the Long-Term Cycle Matters More Than the Headlines

Financial headlines are noisy by design. They don’t lead price action—they follow it. That’s why Steve’s methodology puts far more weight on long-term cycle turns than on whatever narrative the media is pushing.

When the long-term cycle turns up, institutional flows often begin to shift before it becomes obvious. This underlying strength creates the foundation for rallies that can last for months. Watching that structural behavior is far more effective than reacting to news-driven volatility.

The Psychology of Waiting vs. Chasing in Uptrends

It’s tempting to jump into a rally early—especially after a strong up day. But Steve’s philosophy reminds us that successful traders are patient, not impulsive. They wait for structure to invite them in.

This psychological discipline keeps us out of premature entries that can whipsaw us. Instead of chasing price, we’re pulled in by confirmation. It’s a mindset shift: from predicting to preparing.

If you find yourself struggling with this tension, you're not alone. But staying grounded in structure rather than emotion will always yield better results.

People Also Ask About Buying the Dip Strategy

What does “buying the dip” really mean in trading?

Buying the dip refers to purchasing assets after they’ve pulled back within a larger uptrend. The strategy aims to enter at a discounted price before the uptrend resumes. But not every dip is worth buying. Steve teaches that only dips confirmed by structure—like a rising intermediate cycle or supportive price channel—warrant action. Otherwise, you risk catching a falling knife. A well-timed dip buy is less about prediction and more about responding to structural signals that indicate strength is returning.

When is it too early to buy the dip?

It’s too early to buy the dip when structure hasn’t confirmed. That means the intermediate cycle is still heading lower, short-term moving averages haven’t turned up, or price hasn’t broken above recent resistance levels. Jumping in without these markers increases the likelihood of being wrong. Patience is key. As Steve teaches, premature entries often lead to quick stop-outs. Waiting for a clear signal saves capital and builds conviction in your trade.

What tools help confirm a valid dip buy?

Steve avoids noisy indicators and instead relies on clean structure: crossover averages like the 2/3 and 3/5, a turn in the intermediate cycle, and breakouts beyond 5- or 10-day price channels. These tools serve as objective markers. When multiple elements align, they provide confirmation that momentum is returning. These signals help filter false starts and focus your attention only on the most promising opportunities.

Should I use tight stops when buying dips?

Yes. Using tight stops is essential—especially in early cycle stages when reversals are more likely. Stops keep risk manageable and protect capital. If you’re wrong, you exit quickly. If the setup is real, your position survives and grows. Steve’s approach places stops just below the breakout point or structure low. This method keeps you in strong trends but gets you out quickly if the market proves you wrong.

Why does Steve avoid overreacting to headlines?

Because headlines are reactive—they follow price, not lead it. They’re also crafted to grab attention, not guide trades. Steve’s process centers on what price and cycles are doing, not what the media says. By tuning out headlines and tuning into structure, traders avoid being misled by emotional narratives and stay aligned with actual market behavior. This keeps your strategy grounded, consistent, and focused.

Resolution to the Problem

Every trader wants to catch the big move—but only structure can tell you when to lean in. If you buy the dip without confirmation, you’re gambling. If you wait for the market to pull you in with structure and timing in sync, you’re trading with discipline.

Right now, we’re in that fragile window between short-covering and sustainable rally. Let the market earn your commitment, not the other way around.

Join Market Turning Points

Market Turning Points offers daily insights grounded in cycle structure, not sentiment. We help traders recognize the rhythm beneath headlines, using proven crossover tools and timing models to filter out the noise.

If you’re ready to shift from reaction to preparation, join us at www.stockforecasttoday.com.

Conclusion

In markets, opportunity rewards patience. Let structure confirm. Let the cycles align. And let the rally pull you in—not fear, not noise.

The smarter dip strategy isn’t about guessing bottoms—it’s about reading the market's rhythm. When institutional flows confirm, price structure holds, and breakout levels clear, we enter with conviction and clarity.

This discipline isn’t theoretical—it’s practical, repeatable, and grounded in years of market behavior. Traders who succeed aren’t those who act first—they’re those who act right. Let structure lead. Let cycles guide. And stay ready—not reckless.

Author, Steve Swanson