In just a few weeks, President Trump has begun to silence the "buy the dip" traders who have dominated Wall Street for the past two decades. Instead, more and more voices are calling for locking in profits and staying on the sidelines, as Trump's chaotic trade war is disrupting economic prospects and casting uncertainty over who will become the winners of the new era in the stock market.

"Buying the dip now is like buying discounted tickets without knowing who the performer is," said Dave Mazza, CEO of Roundhill Investments. "Unlike the recent reliable instances of buying the dip, the high uncertainty surrounding tariffs and trade policy means investors may ultimately succeed greatly or fail miserably."

This sentiment indicates that Trump, by attempting to reverse the globalization process that has driven the global economy for decades and cutting government spending that provides stable stimulus domestically, has shaken the once prevailing bull market faith on Wall Street.

However, as important as the policy itself is the return of Trump's style—an erratic approach that leads to dizzying cyclical tariffs that are sometimes implemented, sometimes canceled, and sometimes restored. This volatility crushes confidence that any rebound (such as the boost in stock prices on Wednesday) would not quickly reverse once it occurs.

Burns McKinney, Managing Director and Senior Portfolio Manager of NFJ Investment Group, stated, "Uncertainty may last for some time."

This uncertainty has weighed down one of the strongest bull markets in the USA since the Internet bubble of the 1990s. This bull market was driven by expectations of corporate profit growth and that USA technology giants would lead the impending AI revolution. This led to a 54% rise in the NASDAQ 100 Index in 2023, which continued to rise by 25% last year.

Despite growing doubts about whether valuations are too high, this rally once supported the mentality of buying the dip. According to Statistics, the S&P 500 Index did not experience a 2% decline for 356 consecutive days last year until late July, marking the longest winning streak since the global financial crisis.

However, since mid-February, the S&P 500 Index has significantly pulled back from its historical highs, nearing the threshold for a technical correction, which is a decline of 10% or more from recent peaks.

Despite attempts to buy undervalued stocks, such as the index rising 0.5% on Wednesday after two days of decline, the S&P 500 Index has not risen for two consecutive days since its peak in February. Furthermore, this rebound is already fading.

The NASDAQ 100 Index, which is dominated by technology stocks, has also failed to rise for two consecutive days since hitting a record high and entered a correction zone in early March.

Ted Mortonson from NFJ Investment Group said, "At the beginning of this year, stocks appeared to be overvalued by more than 10%." However, he added, "This doesn’t necessarily mean we will suddenly jump in directly."

There has not yet been a capitulation-style sell-off.

Part of the reason is that market observers indicated they have not seen signs that typically suggest a meaningful rebound is brewing. This includes the so-called "capitulation sell-off"—a comprehensive sell-off that indicates sentiment has become overly negative and is ready to reverse.

In fact, data from Bank of America shows that clients have bought stocks for six consecutive weeks as of last week. Junk bond spreads have not reached alarming levels. The so-called "fear index" VIX shows that volatility is increasing but has not yet reached dangerous levels.

Ted Mortonson, Managing Director at Robert W Baird & Co., stated, "We are now in a capital preservation mode." He noted that the market, especially the technology sector, is also facing some common spring headwinds. He pointed out that anyone looking to enter now has not "gone through some very bad cycles."

Of course, this attitude is far from universal, even the recent round of growth concerns has not dispelled the bullish expectations of Wall Street market forecasters for 2025. For example, Citigroup strategist Scott Chronert noted that the recent pullback of the S&P 500 Index has made the risk-reward more attractive. Others are seizing the opportunity to hunt for "bargains."

Shana Sissel, Chief Investment Officer of Banrion Capital Management, stated: "These are opportunities to buy truly high-quality Stocks at more attractive valuations, especially in the Technology sector."

Nevertheless, caution is always necessary for investors trying to time the market. Although Index pullbacks can be a healthy cycle for Stocks, sentiment can easily shift from caution to fear, leading to larger market sell-offs.

Tanvir Sandhu, Chief Global Derivatives Strategist at Bloomberg Intelligence, said: "It's hard to know when to hit the bottom. Catching a falling knife is never a good idea."

Editor/lambor