When the market gets speculative — and I mean really speculative, like Amazon (AMZN) and Tesla (TSLA) both ripping 6, 7, 8% in a single session — there’s a very specific pattern I look for.
And sure enough, it’s happening again. Insurance stocks start getting crushed.
This is exactly what I’ve seen play out with Progressive (PGR) and Arthur J. Gallagher (AJG). These are two names I love as long-term holds. But when the market’s in full-on risk-on mode, they tend to just dump out of nowhere.
It’s not about headlines or news — I haven’t seen anything material hitting these names. It’s rotation. Pure and simple. Money comes out of the defensive names and pours into high-beta stuff.
So when I see PGR or AJG drop hard while everyone else is chasing momentum? I’m watching closely.
The Setup I Wait For
Here’s what I look for. PGR or AJG get slammed on a big up day in the indexes. You get a big red candle — maybe even two or three in a row. Everyone’s piling into speculative trades and these defensive stocks just get nuked.
But every single time that’s happened over the last few years, it’s come right back.
Pull up a chart of AJG and just look. These big red dumps look nasty in the moment — but if you bought every single one, you’d be up huge. Same with Progressive. It’s a pattern I’ve seen repeat over and over again.
Not a Buy Today — But It’s Coming
I’m not saying to buy these names right now. But I would absolutely put them on your watch list. What I’m looking for is three really bad down days — those sharp, out-of-nowhere red candles — and then I’ll start moving in.
And it’s not just about the rebound. These are fantastic companies to hold over the long haul. But when you can get them at a steep discount because the market’s in a speculative frenzy? That’s the moment to pounce.
You can buy pretty much any price on these flash sell-offs and end up green in a few weeks or months. I’ve done it over and over again. You just have to have the patience to wait for the flush — and the conviction to pull the trigger when it happens.
Graham Lindman
Graham Lindman Trading
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