As outlined in the Weekly Market Update, the market is still not giving any reason to be aggressive. There is a lot of unusual action right now.

Continued volatile and choppy action is likely. And it’s not like a pullback would be completely unexpectedly either. So, some caution is definitely warranted. You never know when they happen exactly but the market offers subtle clues, if you pay attention and look closely. I’ve been highlighting some of them over the last few weeks.

• Elevated volatility

• Sell off on good earnings

• Defensive names outperforming

• Gold and silver going parabolic

• Narrowing breadth market

• Crypto getting crushed

Of course, there are no guarantees.

But when you start to see more of these signals, it makes sense to be more cautious. This does not mean to sell everything. It just means to slow down and be more selective. That can feel unsettling after months of strength, but it is a normal and healthy part of any market cycle. Ultimately, you should always know whether you have the wind at your back or fighting against it.

This is an incredibly fast-paced environment. A single tweet can change everything. In periods like this, the goal is not to be aggressive. The goal is to be selective and be prepared. So, here’s how to prepare:

1. Create your watchlist: If you’re a long-term investor in quality stocks, there’s really not much to do. Pullbacks are part of the process. As long as your thesis has not changed and fundamentals are improving, pullbacks are a good time to slowly add to your winners, when they start turning back up. And make sure to create a watchlist of names, you’ve been waiting to initiate a position. Focus on the leading sectors. And focus on the strongest names, not the weakest.

2. Raise cash: If you are more active and focused on intermediate-term opportunities, this is a time to be selective. Think about reducing exposure to your riskiest and most vulnerable positions. Trim names that have run too far too fast. Raise some cash so you have flexibility later. You do not want to be forced to sell into weakness should the market continue lower.

3. Hedge: This is an advanced approach and not suitable for everyone. Hedging requires timing, discipline, and a clear plan. But if you know what you are doing, you can use strategies like shorting indices, buying inverse ETFs, or using volatility instruments to benefit from rising volatility.

In short: Reduce weak positions. Focus on quality. Keep some cash. And be patient. So, that will be my main objective for the moment.

All of this comes back to one key idea. As long as the primary trend remains up, and the broader bull market is intact, pullbacks are opportunities.

But that does not mean you should blindly buy the first red day. Some pullbacks last a few days. Others stretch for weeks or even months. Patience is key. Wait for opportunities to develop. There will always be new opportunities. So, in times of increased volatility, the goal is to keep your portfolio steady and reduce drawdowns as much as possible.

The best way to take advantage of pullbacks is to be prepared. That means having enough cash on hand and your watchlist ready. You want to know exactly what you’re buying and why. That way, when the next opportunity shows up, you won’t hesitate. You’ll know what to do and be ready to act.