Why You Must Be Ready for the Inevitable Summer Stock Market Dive – TheStreet.com

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Brace yourself for a stock market pullback this summer.

That’s the assessment from NYSE trader Peter Costa, president of Empire Executions.

“I’d say by August we will have already gone through it,” he said in an interview with TheStreet. “The summer is going to be a little rocky.”

He thinks the pullback would be a “measured move lower” rather than a flash crash event, as seen in August 2015, when worries over China’s currency reached fever pitch.

The looming downturn, which Costa doesn’t think will be as serious as a traditional 10% correction, could be sparked by fallout from the investigation into Russia’s involvement in the 2016 election, Costa said. 

Pullbacks are healthy, Costa noted, as it gives investors an opportunity to re-balance their portfolios.

Meanwhile, as for FANG stocks, an acronym for Facebook (FB) , Amazon (AMZN) , Netflix (NFLX) and Google/Alphabet (GOOGL) , Costa said shares could rise another 50% but the risk that fills the technology sector isn’t worth it. 

“You have a stock trading at 237 times earnings — come on!” Costa said.

Netflix’s trailing twelve months P/E ratio stands at 214 times. 

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