The Dip Is Coming: How to Profit with TradeSmith’s Snapback Strategy

Buying the dip is all the rage these days.

In fact, retail investors have been ingrained to always buy the dip – any and every dip.

So much so, that it seems like there aren’t many true dip-buying opportunities anymore.

Take the most recent pullback for the S&P 500 (Aug. 13 – 20): It amounted to less than 2% and was bought so quickly and enthusiastically that the index regained all its lost ground in a single trading day last Friday!

But from a seasonal perspective, however, this may be about to change … stress on the maybe.

And if a picture truly is worth a thousand words, then the graph below tells you everything you need to know:

From a seasonal perspective the stock market’s “fear gauge” – the CBOE Volatility Index (VIX) – has a nasty habit of spiking higher over the next two months as stocks typically decline.

And so, it follows that the months of September and October haven’t been kind to investors in the past.

But when bearish seasonality meets bullish buy-the-dip mentality, will the usual seasonal pattern play out this year or not?

That’s anyone’s guess, but the stock market has been overbought for an extended period this summer.

Now, that doesn’t mean stocks must automatically fall in the next two months. But something more than just a 2% pullback is certainly overdue.

Fortunately, TradeSmith offers several strategies that are perfectly suited to buying the dip … if and when we ever get one.

This includes our exclusive Snapback Strategy, as well as our Platinum-exclusive Bollinger Bands and RSI Precision strategies.

Today, let’s focus on the Snapback Strategy, which is perfectly in sync with the kind of melt-up market conditions we have today.

And speaking of sync … later on, I’ll cover how to easily sync up your investment portfolio with TradeSmith Finance, so you’ll never miss out on a moneymaking opportunity.

So, let’s dive right in.

How to Put Snapback to Work

The Snapback Strategy was designed specifically to capitalize on volatile market conditions – just like the ones we’ve seen this year.

We use short-term moving average divergences, along with historical price comparisons, to help pinpoint oversold stocks that are likely to produce a quick, sharp rebound in price.

In backtests on the S&P 500 going back 10 years, the strategy produced an average return of about 16%, counting both wins and losses.

Plus, Snapback has outperformed the S&P by more than 4-to-1 over the past five years!

Snapback is a rules-based approach that can give you a tactical edge, especially in volatile markets. It points stocks you can buy into a downside dip – and profit from the upside rebound rip!

And the easiest way to access our Snapback Strategy signals from your TradeSmith Finance dashboard is to click on Invest, then select Strategies from the sub menu as shown below:

Next, simply scroll down through our exclusive TradeSmith strategies to find Snapback.

You can click on the Manage View tab in the upper right and check the boxes of the TradeSmith strategies you most want to see.

And you can also drag and drop any of the strategy tiles to arrange them in the exact order of importance you want to view them.

You’ll see a brief description of how each strategy is designed, and you can view up to 20 results for stocks that qualify for each strategy.

Simply click on View Results > to open the current Screener view of current results for any of the strategies.

Finally, most of our strategies also include a chart of the backtest results for the strategy compared to the S&P 500 Index.

The Snapback strategy, for instance, has impressively outperformed the S&P by more than 4-to-1 since May 2020 (+46.58% vs. +10.54%)!

When I ran this search yesterday, there weren’t any current results – which isn’t a surprise in today’s overbought market environment. Since Snapback is focused on buying stocks on the dip… the lack of recent pullbacks explains why there haven’t been many dips to speak recently. In fact, there haven’t been any new trades since mid-July.

But be sure to revisit the Strategies page on a regular basis to check for new stocks that qualify for the Snapback, and all our exclusive TradeSmith strategies.

Please Note: if you do not see this feature on your dashboard – and would like to – simply call our Customer Care team at 888-623-0858 to find out more.

The big market pullback in March and April produced several trades. Here is an example of one of those trades to help illustrate how easy it is to follow the Snapback trade alert signals:

Our system triggered a Snapback buy signal on April 14, 2025 in oil & gas giant Devon Energy (DVN). And just over 20 trading days later, members grabbed gains of 18.2% on that trade.

Snapback strategy trades move quickly, and when market conditions aren’t right, you may not see as many. That’s why traders aiming to capitalize on temporary stock pullbacks should consider reviewing the Snapback Strategy frequently for new ideas.

Keep in mind that since this is a short-term trading approach – and considering today’s fast-moving markets – you’ll want to make sure you’re prepared to take action just as soon as new signals flash.

A great way to stay prepared is to make sure you’re getting alerts from TradeSmith Finance as trade ideas appear.

Even better, be sure to sync your investment portfolio to easily track new trading ideas, as well as the performance of your account holdings.

If you haven’t done so already, securely syncing your brokerage account allows you to easily track all your investments in one convenient place.

It’s a quick and effective way to take control over your finances and helps you avoid taking unnecessary risk.

I recently covered our Portfolio Syncing tool in detail in an Inside TradeSmith column here.

It’s a great step-by-step to resource you can use to quickly and safely sync your brokerage account with TradeSmith.

Mike Burnick’s Bottom Line: Interest rates may soon be heading lower at last. If so, stocks may or may not zoom to the upside right away, but history shows that 90% of the time the S&P 500 tends to climb.

Once your portfolio is securely synced with TradeSmith – with alerts and notifications set – you’ll never miss any important changes in your investment holdings.

Good investing,

Mike Burnick
Senior Analyst, TradeSmith

P.S. While the Snapback Strategy is a powerful way to profit from short-term dips, it’s just one of the many tools we’ve built to give you an edge in the market.

And at TradeSmith, we’re always asking: How can we give investors an edge not just today, but for the long haul?

Recently, TradeSmith CEO and software engineer Keith Kaplan revealed a breakthrough quant algorithm – one that transforms a great tool into something even better:  the new and improved Quantum Score, now with an expanded widget inside TradeSmith Finance.

This upgraded system combines key fundamentals that matter most – sales, earnings, and profit margin growth – with the hidden signals of institutional money flow. The result is a simple, intuitive 0-100 score that instantly shows you how strong or weak a stock really is.

You can spot the names Wall Street is quietly accumulating – and just as easily avoid the ones most likely to disappoint.

Keith breaks it all down – and even shares a stock that could be Wall Street’s next big move.

Don’t miss out – click here now before the next big move hits.