>>>I’m ditching 8,252 stocks to focus on just THREE — see why at 2 PM ET<<<
Most traders focus on charts, earnings or big economic headlines. But there’s one critical market move many overlook — dividend price adjustments.
A dividend isn’t just free money landing in your account. It comes directly out of a stock’s share price. The day a stock pays a dividend, known as the ex-dividend date, its price automatically drops by roughly the amount of that dividend. If you don’t account for that adjustment, charts look misleading.
Take Ares Capital Corp. (ARCC), for example. On a non-adjusted chart, those sudden dips look ugly — and alarming. But once you realize they’re dividend-driven adjustments, everything makes sense. ARCC didn’t lose value overnight…
It simply paid shareholders, lowering the share price accordingly. Eventually, it recovers.
The Trading Edge Most Investors Miss
Dividend-driven price drops can create short-term volatility that many traders wrongly interpret as bearish signals. But for savvy traders, this volatility is an opportunity.
Once you understand the cycle — price drop, investor panic, then eventual rebound — you have a predictable, tradable pattern.
Stocks paying high dividends, like JPMorgan Equity Premium Income ETF (JEPI), show this pattern clearly. Every dividend payment creates a noticeable drop.
Unaware traders panic-sell, assuming something’s gone horribly wrong. The smart money, however, buys into this temporary weakness, knowing that JEPI tends to quickly regain lost ground.
Leveraging Dividend Volatility
Here’s how to trade around dividends effectively…
First, identify stocks or ETFs with high yields and predictable dividend histories. Second, note their ex-dividend dates and watch closely. When the price drops, wait briefly for selling to slow, then consider buying the dip. Typically, a swift recovery follows as value investors swoop in, drawn by attractive yields.
This strategy doesn’t rely on complicated indicators. It exploits simple, predictable human behavior — panic followed by rationality.
Remember, though, no strategy is foolproof. Always manage your risk and size your positions carefully. Dividend dips are reliable opportunities, but the market always has the final say.
Understanding this hidden market dynamic — dividends as predictable price volatility — can be your secret edge in trading. Most investors overlook these moves entirely, but once you spot them, you’ll never see dividends the same way again.
I’m also live at 5 p.m. ET on Tuesdays for “30 Minutes of Awesome” — bring your ticker and I’ll analyze it in real time!
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P.S. See Exactly Why I’m Ditching 8,252 Stocks to Focus on Just 3!
The signals shaping up in the market point to major chaos ahead…
That’s why I’m focusing on just THREE tickers to make the most of it – no matter what happens. Want details?
