In terms of stock buying (and selling) habits of institutional investors and retail investors, although the former actively closed positions throughout 2022, with total leverage and net leverage at multi-year lows, retail investors showed extraordinary perseverance, patience and flexibility. But all this has changed in recent weeks, and according to Peng Cheng of JPMorgan , retail investors have now surrendered, not only selling stocks for the second consecutive week, but also completely contrary to how they chase momentum, retail investors sold the market rebound on Monday and Tuesday at the same time.
Specifically, they have sold net sales - $1.1B (below the 12 million average of 1.9-SD), and more notably, they sold in their gains on Monday (SPX +2.59%) and Tuesday (+3.06%). Strangely, they are still buyers of ETFs (+$1.4B), net buying S&P 500 index (leverage adjusted +0.7z), but sell the Russell 2000 ETF (- 2.0z).
U.S. stock Retail traders net selling single stock -$2.4B. The large technology stock , including AAPL (-$470MM), META (-$134MM) and GOOG (-$128MM), suffered particularly hardships.
As retail and total traffic and social media posts show, we are well beyond the peak of retail enthusiasm, and we can now conclude that the distribution phase of institutions’ sales to retail – which defines the market for much of the past two years – has really ended.
More notably, as shown in the figure below, the past two weeks have been the worst sales of a single stock since March 2020 (on the other hand, funds flowing into ETFs are still positive, although showing signs of slowing down).
More details of segmentation by industry group and theme:
From the perspective of large-cap stocks: At the industry group level, driven by automobile and consumer services, the transaction volume is slightly higher, but partially offset by technology hardware. Looking at large-cap stocks, retail has once again reduced exposure to most industry groups (-$2.0B) over the past week. We are again observing some of the strongest retail sales in the tech sector, especially tech hardware (e.g. AAPL, CSCO). This part is offset by the purchases inside the electric vehicle (e.g. TSLA, RIVN, QS).
From the topic: Over the past week, retail investors have once again reduced their holdings on the topic, although Green/ Electric Vehicle Infrastructure (JPAMIGRN) and long-term rising oil beneficiaries (JPAMNRGY) are the edge highlights.
We observe an increase in sales in the domestic (JPAMDOME) and Covid-19 domestic recovery (JPAMCRDB). In terms of wages, we also see retail industry reducing exposure to U.S. wage growth sensitive basket (JPAMWAGG)
options market bearish sentiment is also obvious According to JPMorgan data, retail traders sold -$1.0B of delta and bought 520MM of gamma last week. They offer -$1.3B delta on SPX/SPY, QQQ and IWM, mainly purchased through put options.
Finally, to make things "interesting", this is the latest confirmation that anyone trying to make a little sense of the market is doomed to suffer catastrophic failure: As mentioned above, JPMorgan said, "Retail investors were on Monday and Tuesday."
VandaTrack's latest weekly study shows that "retail investors have been chasing the rebound of the past two days, buying US securities worth $860 million on Monday and $960 million on Tuesday. Given their usual "we expect this trend to continue and inflows will slow down if the rebound fades; however, if the rebound gains traction, we may see an increase in purchases." ”
Although retail investors may buy or sell stocks in the recent circuit breaker, it depends on which type of investment institution "research" is based on which type of investment institution, one thing is clear: Recently, retail investors' favorite stocks like AAPL and TSLA have begun to sell more on a larger scale.This unprecedented selling wave of
This has had a big impact on the performance of retail portfolios. As of yesterday, the relative retracement of the average retail portfolio was once again close to -32%, and began to underperform the S&P 500 again.
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Author: Dorianjun
