By Louis Juricic
This past week was the heaviest week of retail selling since the summer of 2020, according to data compiled by JPMorgan.
The information might be met with shrugs in some circles. The S&P 500 is down 23% from its peak and the Nasdaq 100 is lower by 30%, so it’s probably no surprise that retail investors are net sellers. However, among contrarian investors, the data point has garnered some interest.
As Warren Buffett once said, "Be fearful when others are greedy, and greedy when others are fearful.”
Nathan Rothschild put it much more bluntly, "the time to buy is when there's blood in the streets."
Retail traders net sold $633 million this past week, -2.3 standard deviations below the one-year average, the heaviest week of selling since September 2020, wrote JPMorgan Strategist Peng Cheng in the note.
When decomposed into ETF vs. single stocks, the net inflow into ETFs was eclipsed by outflows from single stocks, the analyst noted. Although S&P 500 ETFs attracted healthy net buying, the NASDAQ 100 ETFs were net sold.
At the single-stock level, all sectors were aggressively sold, Chen noted. Consumer Discretionary order imbalance, led by Tesla (NASDAQ:TSLA), ended the week 3 standard deviations below the one-year average. This was followed by energy.
Chen later summarized the findings in an interview with Bloomberg: “It’s fair to say that retail has capitulated.”