Data from JPMorgan's retail trading shows that by the week ending March 19, individual investors injected over 12 billion dollars into US stocks, a buying intensity that is far higher than the average level for individual investors over the past 12 months. Since individual investors are usually the last to reduce their positions, this recent wave of buying by individual investors may indicate that the stock market has not yet bottomed out. The situation of individual investors entering the market is particularly evident with Tesla, where by Thursday, individual investors had net bought Tesla stock for 13 consecutive trading days, investing a total of 8 billion dollars, reaching a ten-year high, while during the same period Tesla's stock price fell by 17%, with a market cap evaporating by over 155 billion dollars.
Data shows that despite the turmoil in US stocks due to trade disruptions and increasing concerns over economic slowdown, individual investors have not backed down but are continuously increasing their investment despite ongoing losses.
Media reports indicate that JPMorgan Chase's retail trading data shows that by the week ending March 19, individual investors injected over 12 billion dollars into US stocks. According to the bank's Global Equity derivatives strategist Emma Wu, this buying intensity is far higher than the average level for individual investors over the past 12 months.
Market observers are closely monitoring the trends of individual investors because they are usually the last to reduce their positions. Therefore, this recent aggressive buying wave by 'retail investors' may mean that the stock market has not yet bottomed out.
Buying on dips? It may not have hit bottom yet.
Wu noted that the recent behavior of individual investors reflects the typical characteristics of a 'down market year.' She pointed out that a similar situation occurred in 2022 when the benchmark stock index fell by 19%, the only negative growth year in the past six years. 'This reflects their mindset of buying on dips,' said Wu.
Wu estimates that individual investors have incurred about 7% losses so far this year, while the S&P 500 Index had fallen by 3.7% as of Thursday's close. Before 11 a.m. New York time on Friday, the index had once dropped by 1.1%, following forecasts from major US companies including FedEx, Nike, Micron Technology, and Lennar, further exacerbating market uncertainty regarding tariffs and economic growth prospects.
When the market began to sell off significantly in late February, individual investors were still actively buying, which sharply contrasted with institutional investors who at that time were withdrawing from US stocks at an unprecedented pace.
A report from Bank of America on Friday shows that in the week up to Wednesday, both institutional and private clients of the bank bought Stocks at a faster pace, with Global Equity funds reporting an inflow of approximately 43.4 billion USD, the highest this year.
The signals from individual investors also highlight the increasing bearish sentiment on Wall Street. In the past two weeks, strategists from Goldman Sachs, Citigroup, and HSBC Holdings have all lowered their expectations for US stocks. Morgan Stanley's Michael Wilson stated in a media interview on Thursday that the US stock market would not reach new highs in the first half of this year.
Recent weeks have also shown signs that individual investor sentiment has weakened. A widely followed survey from the American Association of Individual Investors indicates that bullish sentiment has remained below 20% for three consecutive weeks, only slightly rebounding for the week ending March 19.
Tesla plummeted as individual investors voluntarily stepped in.
The situation of individual investors entering the market is particularly evident with Tesla. Previously, Tesla's stock price was plummeting, and global sales were dropping significantly, causing even the most optimistic analysts on Wall Street to become cautious. However, fans of Tesla CEO Elon Musk have been frantically buying Tesla stocks recently.
Tesla has always had a group of passionate individual investors who closely follow every word from Musk on his social media platform X. They analyze Tesla's situation in online forums, almost acting as a "cheerleading team" for the stock.
Even by past standards, the enthusiasm of these individual investors has reached astonishing levels. According to Emma Wu, as of Thursday, individual investors have net purchased Tesla stocks for 13 consecutive trading days, with a total investment of 8 billion dollars. This is the largest inflow of funds during any buying frenzy since 2015.
Notably, during this period, Tesla's stock price fell by 17%, and its Market Cap evaporated by more than $155 billion.
Since reaching an all-time high in mid-December last year, Tesla's stock price has sharply declined, as it was buoyed by Trump's victory in the USA presidential election. However, that optimistic sentiment quickly faded, and to date, the stock has dropped more than 50% from its record high on December 17, making it the second-largest drop in the S&P 500 Index this year. The downturn has been so severe that Musk attempted to reassure Tesla employees during an all-hands meeting on Thursday, a move that likely led to a rebound in the stock price on Friday.
Nicholas Colas, co-founder of DataTrek Research, stated in an interview,
"Tesla has made many investors, who were new to the market or in the mid-stage, incredibly wealthy, and many have become millionaires as a result,"
"People won't forget this. If they feel a stock is being excessively suppressed, they will keep coming back to buy it repeatedly. These investors do not care about valuation at all. They simply believe in the company's future and Elon Musk's abilities."
Editor/jayden
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
Comment(27)
Reason For Report