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Market drops can tempt investors with the supposed profits that await those buying coveted stocks at a discount. When markets took a nosedive after President Donald Trump announced sweeping tariffs in April 2025, many considered “buying the dip,” referring to a drop in the stock market from recent averages.

“If you’re thinking about buying the dip, then you’re looking at market losses in a healthy manner,” said Peter Lazaroff, chief investment officer of Plancorp and a member of Investopedia’s advisor council. “The key now is to be smart with what you choose to buy.”

According to JPMorgan (JPM), retail investors bought billions in popular stocks like NVIDIA Corp. (NVDA) on April 3, buying at the highest level in a decade. However, they threw good money after bad, “buying the dip” as stocks continued to plummet into bear market territory.

What Does It Mean to ‘Buy the Dip?’

Ideally, downturns should offer stocks with strong fundamentals at reduced prices. “Buy low, sell high,” goes the famous investing strategy. So what’s not to like?

Many retail investors know that in recent years, pullbacks during an otherwise strong bull market have been followed by quick recoveries. Indeed, investment forums and social media channels go into overdrive with buy-the-dip advice during such periods. These message boards can make it seem easy, but identifying market bottoms is notoriously difficult. Even professional investors with vast resources and experience fail to time market bottoms.

In addition, dips often turn downward into a deeper correction or bear market. Recent downturns had numerous so-called “sucker rallies“—an apt name for what you’ll feel if you buy into them.

What You Need To Know

Assess Your Financials

Before buying into a dip, ensure your overall financial house is in order:

• Only invest what you can handle losing. Adding more risk is only prudent if you can withstand additional losses in the near term.
• Get your debts in order. The guaranteed “returns” from paying off credit cards (some with interest rates as high as 30% annually) are often greater than potential market gains.
• Assess your income stability. Those with stable incomes can afford to take more risks than those facing potential unemployment or fewer work hours.

“Is this truly long-term money that you will not need for seven+ years? And if the market drops further, will you stay calm or feel the urge to panic-sell?” said Michelle Perry Higgins, a financial advisor at California Financial Advisors. “If you’re not confident in your ability to ride out more volatility, it may be best to hold off.”

Consider Dollar-Cost Averaging

Rather than putting all your money into a single dip, consider a more measured approach: dollar-cost averaging (DCA). This involves investing fixed amounts at regular intervals—say, $100 weekly or monthly—and removes the psychological and emotional pressure of timing. If you have a 401(k) with contributions from each paycheck, you’re already doing this.

“Understand that you’re unlikely to time the bottom perfectly,” Higgins said. “Statistically, the odds of buying at the exact low are very slim. Instead, think of it as gradually buying at lower average prices over time … nibbling your way in during downturns rather than trying to hit a perfect entry point. This approach helps build long-term wealth without unnecessary stress.”

Focus on Diversification and Fundamentals

Just because something is on sale doesn’t mean you should buy it. The same is true with stocks. Consider shares of companies with strong balance sheets, sustainable competitive advantages, and reasonable valuations (e.g., lower price-to-earnings ratios). But be wary of companies that appear to be facing business model challenges. For example, as the market lurched into bear territory in April 2025, stocks that took a hit included those most likely to face severe problems in a high-tariff environment.

So-called defensive stocks like those for utilities and consumer staples—things that will have demand no matter the economic environment—may offer better value than others. Defensive ETFs that focus on minimum volatility, like the Consumer Staples Select Sector SPDR ETF (XLP), can leave the choice of specific stocks up to the professionals in a fund’s management.

But keep your portfolio diversified. “Individual stocks are historically a losing route to wealth building,” Lazaroff said. “The best route is to emphasize broadly diversified, low-cost options that are well aligned with your time horizon,”

The Bottom Line

Dips can create buying opportunities that improve long-term returns. But trying to time market bottoms is incredibly difficult, and it’s often impossible to judge whether a severe sell-off is just a temporary overreaction or a harbinger of a prolonged bear market. Investors should remain informed, exercise patience, and avoid impulsive decisions based on short-term market moves.

GameStop (GME) shares rose again today after surging 11% on Friday, as the stock has largely avoided the broader sell-off in equities fueled by concerns about tariffs.

Shares in the video game retailer and meme stock surged to close out last week on news that CEO Ryan Cohen increased his stake in the company, with a regulatory filing revealing he purchased 500,000 shares, taking his total stake to more than 37 million shares, or roughly 8.4% of GameStop’s outstanding shares.

Through Monday’s close, GameStop shares have lost about 23% of their value since the start of the year. The stock had rallied to a two-month high in late March after the retailer announced it had added bitcoin to its corporate investment policy, before paring gains.

Below, we take a closer look at GameStop’s chart and use technical analysis to point out crucial levels worth watching amid the potential for further sudden price swings.

Falling Wedge Retrace

After breaking out above a falling wedge pattern last month, GameStop shares rallied sharply before completely retracing the move.

More recently however, the stock found buying interest near the falling wedge pattern’s top trendline, completing a bullish engulfing pattern in Friday’s trading session. However, a looming death cross on the stock’s chart sends conflicting technical signals.

Meanwhile, Friday’s unexpected rally coincided with the relative strength index (RSI) turning higher, though the indicator remains below the 50 threshold, signaling lackluster price momentum.

Let’s identify crucial support and resistance levels on GameStop’s chart that investors may be monitoring.

Crucial Support Levels Worth Watching

The stock rose 3.4% on Monday to close at $24.29.

In terms of support, it’s worth watching the $20 level. This area on the chart, just beneath the April low, could attract buying interest near a trendline that connects the top of a shooting star pattern last May with prominent troughs that formed on the chart in August and September.

Selling below this level could see the shares retrace to around $18. Investors may seek entry points in this region near a range of corresponding trading activity on the chart between November 2023 and May last year.

Key Resistance Levels to Monitor

A move higher from current levels could initially propel a rally to the $29 level. The shares would likely encounter resistance in this area near last month’s high, which also lines up with last year’s notable July peak.

Finally, buying above this level opens the door for a retest of higher resistance around $34. Investors who have bought GameStop shares at lower prices may decide to lock in profits in this location near the January peak and the high of a significant intraday reversal that formed on the chart last June.

This area also roughly sits in the same region as a projected bars pattern price target that takes the stock’s trend higher from October to January and overlays it from Friday’s breakout point. Interestingly, the prior uptrend analyzed followed a symmetrical triangle, potentially providing clues as to how a future move higher from the current falling wedge may play out.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

Apple (AAPL) plans to send more iPhones to the U.S. from India in response to the Trump administration’s steep tariffs on goods from China, according to a Wall Street Journal report Monday.

The move is reportedly considered a short-term measure as Apple works to secure an exemption from the tariffs, like the one it received from the tariffs President Trump imposed during his first administration. 

Apple did not immediately respond to a request for comment. 

Trump announced a 34% tariff on goods from China last week, on top of a 20% import tax imposed earlier in the year. Tariffs on Chinese goods could also rise further, Trump warned Monday, if the administration responds to China’s decision Friday to institute a 34% tariff on U.S. goods with a higher rate. Trump had announced a 26% tariff on goods from India, by comparison. 

Apple manufactures 90% of its hardware in China, and the company would need to raise prices 6% in order to offset the impact of tariffs if it isn’t granted an exemption, JPMorgan analysts said last week. Potentially helping Apple’s case is an announcement in February that it plans to invest more than $500 billion in the U.S. over the next four years, the analysts said.

Shares of the iPhone maker dropped close to 4% in Monday’s session and have lost about a fifth of their value since the tariffs were announced last Wednesday through Monday’s close.

Dollar Tree may be a “dark horse” beneficiary of widespread tariffs, Citi analysts said Monday while upgrading the discount retailer’s stock.

With import taxes slated to affect nearly all U.S. trade partners, Dollar Tree (DLTR) will have cover to raise prices without deterring too many customers, the bank wrote in a research note. Dollar Tree performed well during prior downturns and has cultivated a reputation for offering value, which analysts said will serve the chain well.

Citi upgraded its rating to “buy” from “neutral” and gave Dollar Tree a target price of $103. That’s more than 52% above where shares closed Friday and about 25% higher than the consensus price target among analysts who follow the company and are polled by Visible Alpha.

“We believe this higher-tariff-across-the-board environment is going to be a positive for [Dollar Tree],” the note said. “We think that [Dollar Tree] has cover to increase their base price in this environment with everyone else also increasing prices.”

Citi Analysts Think Tariffs Will Hit Rivals Harder

About half of Dollar Tree’s products will be subject to import taxes under the “reciprocal” tariffs unveiled by the White House last week, Citi estimated. But the tariffs affect so many nations that many of the discount retailer’s rivals will also be paying—and charging—more for merchandise, the analysts said.

Customers accepted Dollar Tree moving away from a “base” item price point of $1 when freight costs shot up in 2022, Citi said. Current trade policies may get the chain to a $1.50 or $1.75 price point, analysts added.

“We believe the current environment is ideal for [Dollar Tree’s] value proposition to thrive,” the note said.

Dollar Tree shares rose nearly 8% in trading Monday. Still, the shares are more than 40% below their levels seen a year ago.

Shares of Tesla Inc. (TSLA) have long confounded Elon Musk’s critics: while sales have collapsed in some key markets, retail investors remain remarkably devoted to the firm.

For example, after news broke that Tesla’s European sales had plummeted 40% year-over-year in January 2025, even as the wider electric vehicle (EV) market grew 26%, retail investors poured $7.3 billion into Tesla stock over the next 12 days, the most of any “buying streak” over a decade, according to JPMorgan’s “Retail Radar.”

The report suggested this was more money chasing after bad: Noting that Tesla’s retail investors were down 7% in the year to date versus 3.3% for the broader S&P 500 index, JPMorgan analysts pointed out, “Most of the drawdown came…as they increased their holdings.”

What gives? “Core investors” have an “undying faith in and love of Elon Musk,” Steve Sosnick, chief strategist at Interactive Brokers, told Investopedia. “In fact, I’ve frequently referred to it as a ‘faith-based’ stock.” But, he added, “that faith is well-earned after making many long-term investors quite rich.”

It’s Not About Tesla’s Past or Present, But Its Future

“Tesla’s electric vehicle business is under pressure from pricing challenges and fierce competition, with 2024 marking its first-ever annual delivery decline,” John Blank, chief equity strategist at Zacks Investment Research, told Investopedia. “Musk’s divided attention and growing political controversies have investors questioning whether Tesla is still his top priority.”

However, it’s Tesla’s long-term prospects that count most. “Musk wants the company to be primarily viewed through the lens of AI and robotics rather than solely as an automotive company,” Blank said.

Among the CEOs of automakers, “only Musk is perceived as an avatar of the future,” Sosnick said.

Hence, investors’ “faith is based less on corporate fundamentals than futurism—robotaxis, etc.—which is why the stock’s valuation is way above that of a conventional auto company,” Sosnick said. “Thus, if you’ve already decided that the stock is all about the future, you can overlook some pesky details about the present.”

That’s borne out in interviews. “To be honest, I’m not a huge fan of Tesla’s EVs,” a retail investor who snapped up more shares of TSLA as its price fell in March 2025 told Business Insider. “My bullish outlook is more on the AI and autonomous side of the business.”

Tesla’s Next Chapter

Instead of the usual “dumb money” derision one might expect, analysts we spoke to don’t think these investors are irrationally following market sentiment.

For several years, Tesla has been making a strategic pivot beyond its core automotive business. “Tesla’s long-term growth prospects still remain strong, driven by its thriving energy generation and storage segment, expansive supercharger network, and AI advancements,” Blank said. The company is sitting on a massive cash pile to help make that happen—about $37 billion at year-end 2024.

“Pretty much all” of Tesla’s market cap is based upon future expectations, and that has always been the case, Sosnick said, noting that General Motors Company (GM), Ford Motor Co. (F), and other automakers all have single-digit price-to-earnings ratios, which means investors are valuing them based almost wholly on where they are now, not where they are likely to be in the future.

For core investors, the numbers are compelling: While automotive operations still accounted for 78.9% of Tesla’s total sales in 2024, its Energy Generation/Storage segment showed remarkable growth, with revenues rocketing 113% year over year in the fourth quarter and its energy storage deployment reaching 11 gigawatt-hours, Blank noted. In addition, “the charging business has the potential to evolve into a substantial revenue stream for the company,” he said, especially as major automakers are forced to adopt Tesla’s charging standard.

However, major challenges remain. Sales of the Cybertruck, launched in 2024, sputtered and the vehicles were recalled for significant problems. In addition, most investors surveyed think Musk’s political activities have damaged the company—they’ve sparked mass protests and acts of vandalism against the EVs and dealerships worldwide. Meanwhile, General Motors, Ford, emerging players like Rivian Automotive, Inc. (RIVN) and Lucid Group, Inc. (LCID), and Chinese competitors like BYD are gaining ground fast as Tesla’s overseas sales drop precipitously.

The Bottom Line

The question is whether Tesla’s ambitious expansion into energy, AI, and autonomous driving can offset the significant challenges in its automotive business. Given the headwinds the company faces, the execution of this transformation becomes all the more crucial if the faith of retail investors is to be justified.

Unlike in President Donald Trump’s first administration, manufacturers may have no place to hide as widespread tariffs could disrupt global supply chains.

Trump’s tariffs unveiled last week that will be levied against imports from a long list of countries, including 34% on goods from China, 26% on India, and 20% on the European Union. Trump has said the goal of the tariffs is to reorder global trade and bring more manufacturing back to the U.S. However, economists think that instead of relocating to the U.S., manufacturers may just get tangled up in supply chain challenges.

“Broad tariffs across global trading partners, unlike prior narrower bilateral ones, limit the ability of the global trading system to adapt,” wrote Deutsche Bank economists and researchers. “This comes at the cost of fundamentally undermining global supply chain models that have emerged over the past several decades.”

Wide Range of Tariff Targets Leaves Little Room for Supply Chains to Adapt

After Trump first introduced tariffs on China during his first term in 2018, supply chains reoriented through countries like Mexico and Vietnam. However, Vietnam is now facing a 46% tariff under the new policy, and Mexico has already been hit with a 25% tariff on all goods not covered by the USMCA trade agreement.

Many manufacturers are also reluctant to move their operations to the U.S., where labor is often more costly than where they are currently producing their products. According to an Apollo analysis, the typical U.S. manufacturing worker earns nearly $6,000 a month, while their counterpart in China makes just over $1,100, and an Indian manufacturing worker only makes around $195.

That means importers have few options to avoid the tax this time around.

“If the U.S. imposes high tariffs on Mexico, China, India and the European Union, and cuts off aid to major resource economies in Africa, there isn’t much room left for the global supply chain to move,” said Vidya Mani, University of Virginia associate professor of business administration, during an interview on the school’s website.

Supply Chain Changes Could Be Costly for Companies

Some industries will be impacted by supply chain disruptions more than others; apparel and automobiles are particularly susceptible to trade disputes. In some cases, it will be more cost-effective for companies to pay the tariffs than relocate their production, Mani said. 

“Changing the supply chain in response to high tariffs is a massive undertaking and lasts beyond any one administration,” Mani said.

And while some of the tariff costs will be passed onto consumers, it’s also likely that profit margins will drop for corporations that import into the U.S. 

“We will be paying close attention to where sales are generated and the level of cross-border trade within companies to establish how they might be affected,” wrote Janus Henderson fixed-income portfolio managers Brent Olson and Tim Winstone.

The major U.S. equity indexes were lower at midday Monday, extending last week’s losses as the Trump administration showed no signs of pulling back from sweeping reciprocal tariffs. The Dow Jones Industrial Average, S&P 500, and Nasdaq all lost ground.

Tesla (TSLA) shares tumbled as the tariff-fueled selloff continued, and Wedbush analysts led by bull Dan Ives cut their price target for the stock to $315 from $550 previously.

Nike (NKE) shares fell amid worries that its key manufacturing partners in Vietnam, Cambodia, China and Indonesia would face punishing tariffs. 

Goldman Sachs (GS) shares also dropped after Morgan Stanley analysts downgraded the bank to “equal-weight” from “overweight,” citing the Wall Street bank’s large exposure to investment bank revenues amid rising recession risks and “deteriorating market conditions.”

Dollar Tree (DLTR) shares soared as Citi analysts upgraded the stock to a “buy” on the discount-retail chain’s potential to raise prices in the new tariff environment.

Mesa Air Group (MESA) soared after the carrier agreed to merge with fellow regional carrier Republic Airways in an all-stock transaction.

U.S. Steel (X) shares jumped as President Trump announced his administration would undertake a new review of the company’s merger with Nippon Steel.

Oil and gold futures sank. The yield on the 10-year Treasury note edged higher. The U.S. dollar gained ground against the euro and yen but fell against the pound. Prices for most major cryptocurrencies fell.

Stocks have been hit hard. That’s cut into the wealth of a broad swath of Americans. 

More than 60% of Americans have money in the market, according to Gallup data from May, up from a bit above 50% in the middle of the last decade. That reflects comparatively large holdings among those with annual incomes at or above $100,000—but Gallup also found that about two-thirds of middle-income Americans, and a quarter of those with annual incomes below $40,000, were invested through some combination of stocks or funds. 

That tracked with data released in late 2023 by the Federal Reserve, which found that more than a third of families in the bottom half of the U.S. income distribution held stock—along with more than three-quarters of the upper-to-middle income group and 95% of the top decile.

Last’s week’s dramatic and downbeat market response to the Trump administration’s latest announcement on tariffs has led many investors, from Wall Street to Main Street, to wrestle with how to respond as they’ve seen their portfolios shrink.

A steep two-day drop-off left some waiting for the market to change direction and others who expect the drubbings to continue; Monday morning, stocks have whipsawed. (Follow Investopedia’s live coverage of today’s markets here.) 

About a fifth of Americans who invest in stocks believe they have a “high” risk tolerance, according to YouGov data released Friday, while about 40% said they generally maintain their investments amid economic or market uncertainty.

“Your brain has identified a risk and it’s screaming at you to run away. It’s working as intended. Otherwise, I’d recommend you get your head checked,” wrote Callie Cox, chief investment strategist at Ritholtz Wealth Management, in an emailed commentary. “Honor your natural tendencies, but don’t listen to them. In many situations, touching the hot stove isn’t the best solution.”

JPMorgan Chase (JPM) CEO Jamie Dimon wrote in his annual letter to shareholders Monday that the Trump administration’s newly announced tariffs are likely to slow growth and raise prices.

“For the short-term, we are likely to see inflationary outcomes, not only on imported goods but on domestic prices, as input costs rise and demand increases on domestic products,” Dimon wrote. “How this plays out on different products will partially depend on their substitutability and price elasticity. Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.”

Dimon said that President Trump’s policy platform of “America First is fine, as long as it doesn’t end up being America alone.”

Negative Tariff Effects ‘Would Be Hard to Reverse’

The CEO also said that once the currently proposed tariffs are negotiated, he hopes there are long-term positive impacts for the U.S., like increased manufacturing. However, Dimon stressed the need to resolve the tariff issue quickly, “because some of the negative effects increase cumulatively over time and would be hard to reverse.”

Dimon and other banking executives are likely to give their first extended thoughts on tariffs and the current state of the economy on their first-quarter earnings calls. JPMorgan is slated to report its results Friday.

For more of the market’s reaction to the latest tariff news, check out Investopedia’s daily live markets coverage.