Yes, from cashflow. It'd be nice to have a magical stash of cash to dip into for buying opportunities, but most of us don't. So if the market is down, I put everything beyond necessary expenses into the market; when it's up I do other things with some of it, like home improvements, paying down the mortgage, maybe spending on vacations or "stuff".
A couple of percentage point drops is just trying to shoot for market timing...
I don't think we're talking about drops of a couple percentage points (I'm not - you'll have to ask MMM), but major events like '08 or the crash of '89. That was when I first got started in investments: a few years out of college, I put most of my savings into the market & lived really close to the bone for a while. Couple of years later, I had enough profit for the downpayment on my first house.