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I talk a lot about buying the dip. If you’re new to options trading, this is a really important trading strategy to learn. You can scoop up some really high-quality names on the cheap.

Ironically, dip buyers are not super active during a strong bull market like we are currently experiencing. In 2025 we have printed more than 30 new all-time highs on the S&P 500. New highs tend to lead to even higher highs thanks to the power of momentum. But this is not when dip buyers step in.

What to know about buying the dip

Where and when do dip buyers show up? It’s a good question, and as a technician, I can guesstimate where a dip buying opportunity may lie.

It often happens when price hits a moving average

When prices hit support on a moving average, like the 10, 20, and 50 day, this is when dip buyers arrive on the scene. It doesn’t always work this way, but that is a signal savvy traders and investors wait for.

If you see dip buyers stepping in when the price marks a higher low in the chart, you can surmise the trend is bullish (with more higher highs and higher lows on the way).

They buy high-quality names

When the conditions are ripe for buying the dip, there is nothing better than buying a high-quality name that got thrown out with the bath water. Big money managers make their careers by pouncing on names that have pulled back sharply.

This has happened with Broadcom, Meta Platforms, Microsoft, and most recently, Google and CrowdStrike. All are names that went down with the markets. Savvy dip buyers stepped in at certain moments to add shares. Take a look at their charts – these names are up sharply.

So when is it time to buy the dip? If high-quality names have pulled back and found support from a moving average, then you know what to do.

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