(The chart shows net flows into/out of equities)
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Another bit of data supporting the idea that retail traders are as susceptible as ever to human nature and crowd psychology. According to Citadel, retail players turned heavy net sellers last week, perhaps suggesting near-term capitulation. They bought the the highs hand over fist in late January.
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It's a season of the year when people of several religious traditions are ritually reciting ancient articles of faith, such as "Markets panic until policy makers panic..."
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As I've said for a couple years, a broader market isn't a safer or more rewarding one. But FWIW, the many continue to hold up better than the few.
Equal-weighted S&P 500 back to a relative high vs. the market-cap-weighted version, outperforming by more than eight percentage points over five months.
Equal-weighted S&P 500 back to a relative high vs. the market-cap-weighted version, outperforming by more than eight percentage points over five months.
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We’re at that point in a market retrenchment when investors begin to wonder if the early alarmists are the true realists. Markets have been sliding along a probability spectrum from TACO to quagmire.
Where we stand to start the week, as tape readers look for "more extreme extremes."
New column.
Where we stand to start the week, as tape readers look for "more extreme extremes."
New column.
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Deja vu is a trick of the mind, right?
Circumstances not exactly the same, but last year on this date S&P 500 was sliding from an early-year peak as investors debated how much disruption was priced in (then tariffs, now Iran/oil). Off 7.3% then, 7.5% now.
Posting now to inoculate against a rerun.
Circumstances not exactly the same, but last year on this date S&P 500 was sliding from an early-year peak as investors debated how much disruption was priced in (then tariffs, now Iran/oil). Off 7.3% then, 7.5% now.
Posting now to inoculate against a rerun.
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Hey look, retail puked into a pullback, just as history should have told us they would...
bsky.app/profile/sherwood.news/post/3mhuxt5ymcn25
bsky.app/profile/sherwood.news/post/3mhuxt5ymcn25
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This is all in addition to the sports-betting/prediction-markets craze getting intertwined with stock trading, of course. Robinhood's prediction-market revenue is modest but material to its business, nearly all of it from zero-sum sports contracts...
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This is far from the market's main challenge, and the past six months of churn have gone a long way toward skimming the froth off stock valuations.
But the above efforts, along with an ETF industry that's jumped the shark with leveraged and synthetic-yield structures, invite excess and mischief.
But the above efforts, along with an ETF industry that's jumped the shark with leveraged and synthetic-yield structures, invite excess and mischief.
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This hits at a trend we discussed on yesterday's 4pm show: A strong theme of late-cycle permissiveness/corner-cutting at play in tofay's market. Retail funds formed to own overgrown AI startups, index providers looking to speed huge AI IPOs into benchmarks, SEC reducing quarterly reporting mandates.
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Let's stop lionizing retail traders for supposedly buying every dip with courage and aplomb.
Aggresive retail buying was nowhere to be found in the days leading into last week's market lows.
As ever, they gorged at the highs and one sign that a bounce was due was small traders fleeing. Via Citi...
Aggresive retail buying was nowhere to be found in the days leading into last week's market lows.
As ever, they gorged at the highs and one sign that a bounce was due was small traders fleeing. Via Citi...
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And the bounce is happening with the market just shy of registering true washout "close your eyes and buy regardless of the news" conditions. This stuff is rarely neat and tidy.
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All of the skepticism about the crediblity of ceasefire-talk claims and all the concerns over the complication of recovering energy flow, etc., are valid and proper.
But if you don't see there's at least signal value in the President wanting a path out, just stop opining on reflex market reactions.
But if you don't see there's at least signal value in the President wanting a path out, just stop opining on reflex market reactions.
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The real bear case isn't simply that no ceasefire happens and the region remains unsettled.
It's the chance that the market's difficulties weren't mainly about the energy shock but had already been surfacing since risk appetites peaked in October with late-cycle stresses in credit markets, etc.
It's the chance that the market's difficulties weren't mainly about the energy shock but had already been surfacing since risk appetites peaked in October with late-cycle stresses in credit markets, etc.
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Of course there are so many "But what about..." questions and contingencies. But don't dismis the market's ability to look through near-term complications if it gets the sense the moment if peak uncertainty/peril has passed. See 2025's "tariff delay" rally (from, admittedly, more depressed levels).
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Given how stretched stocks were to the downside, the reflex surge to the de-escalatory Trump post makes perfect sense.
It so far has just rcovered the downside from Thursday-Friday. The 20-day moving average, just above, is often where a bounce tells you if it's a dead cat or not...
It so far has just rcovered the downside from Thursday-Friday. The 20-day moving average, just above, is often where a bounce tells you if it's a dead cat or not...
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Everyone immediately decided the market bounced on a flimsy untrustworthy headline, I guess that settles it then.
Because a market that grabs for any faint excuse to stop going down can't be telling us anything worth listening to. Crude traders must also have been duped, oil slipping 3%...
Because a market that grabs for any faint excuse to stop going down can't be telling us anything worth listening to. Crude traders must also have been duped, oil slipping 3%...
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President Trump: "The S&P 500 had just hit 7000, they said that was even more impossible than the Dow hitting 50,000."
Wall Street strategists' year-ahead S&P targets coming into 2026 ranged from a low of 7100 to a high of 8100.
Wall Street strategists' year-ahead S&P targets coming into 2026 ranged from a low of 7100 to a high of 8100.
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Fed Chair Powell describing the policy dot plot while also pandering to a room full of reporters on deadline who know the feeling: "You gotta write something down and this is what people wrote down."
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Mets' hedge-fund-manager owner trying to buy his way out of a losing position, always works.
On the other side, it remains unconscionable that the Steinbrenners run the Yankees near breakeven rather than spending more in line with their resources...
On the other side, it remains unconscionable that the Steinbrenners run the Yankees near breakeven rather than spending more in line with their resources...
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So far the tape refuses to reprice for a lasting oil surge. It's less blind complacency than a somewhat rational yet hopeful stance that accounts for the odds of getting lucky with a near-term de-escalation.
It helps that the S&P was at this level five months ago and sentiment was already subdued.
It helps that the S&P was at this level five months ago and sentiment was already subdued.
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The market continues to operate pretty mechanically, each big-cap index down in lockstep today.
The jump in event-driven volatility prompted an incremental step-back from risk, not an emotional flight. The rotational muscle memory (sell one thing, buy another) is ingrained. Unstable equilibrium.
The jump in event-driven volatility prompted an incremental step-back from risk, not an emotional flight. The rotational muscle memory (sell one thing, buy another) is ingrained. Unstable equilibrium.
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The broad selloff has broken the market's "protection through rotation" routine, the S&P 500 cracks the bottom of the YTD range.
Old trader voodoo says breaking the December low early the next year is a bad omen; we just did.
Still only 4% off a record high, getting as oversold as at recent lows.
Old trader voodoo says breaking the December low early the next year is a bad omen; we just did.
Still only 4% off a record high, getting as oversold as at recent lows.
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History says regional military conflicts don't end bull markets. Flight from risk tends to be brief if the economy/market isn't already in a downturn.
Still, markets have been in an uneasy equilibrium: Early-cycle reflation hopes, late-cycle credit fissures, existential AI concerns.
New column.
Still, markets have been in an uneasy equilibrium: Early-cycle reflation hopes, late-cycle credit fissures, existential AI concerns.
New column.
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