As the third quarter earnings season approaches, with Big Banks set to kick it all off on Friday, Robinhood (HOOD) head of investment strategy Stephanie Guild joins Catalysts to discuss retail trading trends ahead of this crucial period.

Guild observes a clear pattern among Robinhood customers: "They trim their winnings and buy the stocks that have been dipping."

She cites Tesla (TSLA) as an example, noting that investors who saw gains over the past month were selling to invest in temporarily underperforming stocks like Nvidia (NVDA). However, she emphasizes that in terms of risk appetite, individuals are "truly committed to these long-term positions," particularly in the Magnificent Seven tech stocks, as these are companies "they know and use."

Guild likens retail investors' trading behavior to that of a portfolio manager, noting that they "trade around the volatility."

Regarding her market outlook for the year, Guild has set a year-end target of 5,800 for the S&P 500 (^GSPC), with a 20% chance of the market reaching 6,100.

"I think we just have to get through some of the volatility [and] the reasons we have volatility today," she cautions, citing factors such as the Federal Reserve's interest rate trajectory, potential weaknesses in the labor market, and the upcoming election as key drivers of market uncertainty.

To watch more expert insights and analysis on the latest market action, check out more Catalysts here.

This post was written by Angel Smith