Retail investors still stay out of the stock market

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Retail investors still stay out of the stock market

Last week the news was retail investor abandonment of shares by not taking advantage of falls in the market to buy. This trend to have continued this week as pointed out from JPMorgan Chaseaccording to Lu Wang on Yahoo Finance.

Retail investors, who had almost always bought the dip since the pandemic collapse, dumped stocks last week and sales reached their highest level since September 2020according to a JPMorgan estimate based on public data on the bags.

The exodus marks a notable change for small investors who are mostly endured during the liquidation of 15 billion dollars of this year. The sentiment is finally sinking in with the accumulated losses on your favorite stocksas well as in cryptocurrencies, says the JPMorgan Strategy Peng Cheng.

“There was a trend of weakening demand,” Cheng said in an interview. “It is fair to say that the retail investor has capitulated.”

The discontent This is good news for market watchers who focus on cathartic selling signals which, they say, would indicate that the downdraft has bottomed out. From hedge funds to quantitative investors, professional investors have cut their exposure to stocks to multi-year lows. Now the army of day traders joins the bear crowd after spending many months going up against the pros.

It’s not that the spirits of gamers have completely died out among the retail crowd, many of whom started investing during the Covid lockdowns, armed with government stimulus checks. On Wednesday, it accumulated in Revlon shares, a cosmetics maker that this month filed for bankruptcy, sending shares soaring 34%.

But generally speaking, the buying once euphoric is getting cold. The retail demand tracked by JPMorgan has been below the one-year average for the past eight weeks. In the options market, bearish put options are inunlike last year when bull calls were frantically sought after for quick profits.

It’s not hard to see why fans are finally giving up. With the S&P 500 falling as much as 23% from its peak and the Nasdaq 100 falling more than 30%the profits that novice traders once took pride in are rapidly evaporating. “As of June 13, all of his trading profits made during the meme stock era had been wiped out,” JPMorgan estimated.

“They were a major driver of the inflated valuations we saw in tech and crypto,” he said. Michael Wang, CEO of Prometheus Alternative Investments. “The reality is that the retail investor tends to buy more at the top and less at the bottom. We have seen this before in almost every market cycle, including the dot-com bust.”

JPMorgan Chase closed Thursday’s session in the red at $113.92 and the location of the moving averages, the 70-period one below the 200-period one, would give us a bearish signal. Meanwhile, Ei indicators are mostly bearish.

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