Why I’m Not Worried About This 4% Pullback — And Why You Shouldn’t Be Either

by Chris Pulver | May 20, 2026

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Two wild and volatile but ultimately nothingburger days as the market sputters, VIX expiration and FOMC today today, and winners across Daily Profit Play, Flashpoint and Double Up [tap to join us for the Daily Profit Plan]!

Let me cut through the noise for you. Everyone’s acting like the sky is falling because we’re down a couple points from all-time highs. But the Nasdaq just went up 30%, and we’re only down 4% or 5% from those highs.

That’s not a catastrophe. That’s a normal, healthy pullback after an extraordinary run.

What we’re seeing right now is textbook market behavior after an overextended rally. The market priced in quick movers and fast moves right away, got ahead of itself and became really overextended. I was watching markets trade three to five standard deviations higher than moving averages — and when that happens, the market naturally pauses and pulls back with market forces.

This is exactly why I never chase. I let price set up and come to us. Trying not to chase has been the best decision lately, because you don’t have to chase the market to find opportunities. You’re not left wondering what to do when you stay patient and let the setups form.

Understanding What’s Really Happening Here

A huge part of this unwind is simply clearing the leverage, especially in those 2x and 3x leveraged products. Nvidia (NVDA) has so much leverage running through it that when you tack on double- or triple-leveraged ETFs, that’s where all the craziness happens.

I avoid those products altogether — stock options are already leveraged enough.

This isn’t a reason to panic. It’s a reason to let the market do what it needs to do. Once the extreme conditions cool off, the next leg becomes possible. That’s why I’m not ruling out a solid pump in June — especially with a major IPO coming that could debut as one of the biggest companies right out of the gate, and with the market waiting for NVDA earnings later today to guide the next move.

These reflexive swings create reliable mean-reversion opportunities. We’ve seen single-day sell-offs repair themselves within a day or two, with the entire candle getting reclaimed almost immediately.

That’s why it’s so important not to overreact to these quick moves.

And if you’re trying to play directional options in these environments, remember one thing — you can’t make money directional in high implied vol names. The options are too inflated, which is another reason patience and selectivity matter more than ever.

The Setup I’m Watching Through Summer

Volatility windows will show up, particularly in June, as leverage resets and overbought conditions unwind. While this happens, it can make sense to shift to safer corners of the market — the boring banks, for example, tend to hold up well when tech takes a breather.

Or keep it simple and trade the indexes and other lower-risk vehicles until cleaner setups emerge in the high-beta names.

What’s Next

NVDA earnings today — a key catalyst traders are waiting on
A major IPO slated for June that could instantly rank among the largest companies ever in SpaceX
Seasonal volatility that often sparks new trend formation once leverage resets

For more advanced readers, it’s worth understanding why large swings have been more contained recently. Institutions and hedge funds use 0DTE options daily to hedge and manage exposure, which keeps the market from swinging 5% intraday even during headline-heavy periods.

As more traders adopt short-dated hedging, sudden spikes can compress instead of expanding.

There’s also a regulatory shift coming that could change participation dynamics this summer. With updates removing the old pattern day trading rule, more traders will have the ability to be active intraday without the previous constraints.

Increased liquidity and higher participation can change how certain instruments trade, especially around key levels.

The bottom line? Don’t let headlines push you into emotional decisions. The market just went up 30% in the Nasdaq. A 4-5% pullback is healthy, normal and exactly what should happen after such an aggressive move. Let it play out.

Mindset Matters

In choppy environments, the hardest part isn’t the market — it’s us. We tend to get in the way, overthink, overanalyze and make moves simply because we feel like we need to be doing something. Staying disciplined, avoiding FOMO and letting the setups come to you is the real edge right now.

I’ll see you in the markets.

Chris Pulver
Chris Pulver Trading

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