The market is dealing with three different risks at once:

1. Geopolitical risk from the Strait of Hormuz, which could push energy prices higher.

2. Sticky inflation, reducing the probability of near-term rate cuts.

3. Valuation risk in AI-related stocks after an extraordinary run.

For long-term investors, a 2-5% pullback is not unusual after such a strong rally. However, the key question is whether earnings growth can continue to justify current valuations. If AI spending remains robust, many of today's leaders could eventually grow into their multiples. If spending slows, further compression is possible.

My approach would be selective accumulation rather than aggressive dip-buying. High-quality companies with strong cash flow and competitive advantages are more attractive than leveraged ETFs, which can magnify volatility in both directions. The market may remain choppy until there is greater clarity on inflation, Fed policy, and Middle East developments.