In the most recent three months, individual investors bought $76 billion worth of stocks, an average of $1.3 billion a day.
Whether it was a former retail investor in the U.S. stock market who became famous for pushing Meme stocks up by himself, or the Nasdaq and the Dow the day after the Fed announced the largest interest rate hike in more than two decades in early May, the Nasdaq and the Dow hit a record since June 2020. After the biggest drop, retail investors aggressively bought on dips to near-record levels, and retail investors can always be seen in the darkest moments of U.S. stocks.
The three major U.S. stock indexes hit new highs for more than a week on Thursday, and the Dow rose for five consecutive weeks.
According to the latest data from Vanda Research, a research firm that tracks retail trade flows in the United States, the net inflow of retail investors is near an all-time high. There are $1.3 billion. Meanwhile, retail investors’ portfolios shrunk by an average of 32%, the worst performance since Vanda tracked data in 2014.
Vanda Research researchers Marco Iachini and Giacomo Pierantoni said in a report:
History shows that when faced with large losses, retail investors are the first to suffer losses, but sentiment still appears to be resilient.
To be sure, risk aversion will eventually return, especially if stocks experience a sharp and rapid decline from here.
Other sentiment indicators from social media appear to confirm that retail investors remain focused on buying limit-down levels. As Vanda noted, the number of comments and topics related to “market bottoms” in the WSB subsection has increased to last January’s highs, suggesting speculative retail investors are seeing the market again at current levels. Signs of a bottom (that is, levels well below the true market bottom for this cycle in March 2020).
In addition, Google Trends data also confirms that interest in the “market bottom” is still far from the level during the epidemic decline. While the number of searches related to the topic is nowhere near the levels seen in early 2020, these search terms (“market bottom”) are three times more popular than they were during the Q4 2018 sell-off.
Over the past week, the S&P 500 has been on the verge of falling into a bear market, but retail investors have adopted a strategy of buying the dip, which has helped the index rebound quickly in a short period of time. In the absence of additional selling pressure from institutions, large inflows from retail investors may have been the main driver of the sharp intraday rally, Vanda said. According to Vanda, the favorites among retail investors are tech and growth stocks such as Apple, Tesla and Amazon.
So the next question naturally comes, how many retail investors can support the market to make US stocks rebound? According to Vanda, the net retail buying data shows a high correlation with intraday price action in the S&P 500, with changes in net retail buying of $10 million moving the stock on average by about 20 basis points, at least over the past 3 years. This is the case for a trading day.
edit/lydia
This article is reprinted from: https://news.futunn.com/post/15930436?src=3&report_type=market&report_id=206747&futusource=news_headline_list
This site is for inclusion only, and the copyright belongs to the original author.