In its latest note (available to zerohedge pro subscribers) discussing the ongoing market
pukefest dynamics, Morgan Stanley’s Quantitative and Derivatives group (QDS) wrote that “institutional real money plus retail have been driving more of the sell pressure and are likely to continue to drive price action in the medium-term.” Echoing what we said last week, and a reversal of the pattern observed one month ago…
Relentless hedge fund selling of every rally, retail buying
JPM Prime “From a HF flow perspective, however, there’s been a fairly strong bias to sell-the-rally (STR) as JPM Prime has seen net selling in 8 of the past 9 days” pic.twitter.com/icxcif5ymV
— zerohedge (@zerohedge) April 4, 2022
… Morgan Stanley cautioned that retail demand has begun to slip, and retail will likely be less supportive to the broader equity market going forward:
Retail demand has been weaker than expected relative to seasonal trends post-tax day, estimated retail P/L is deteriorating, and inflation is eating away at individuals’ disposable income.
The QDS conclusion: “Retail has been an important buyer of dips, and with the retail bid dissipating just a lack of buying is likely enough to create an air pocket in the medium-term.”
The reason why retail has chilled on risk assets and appears completely turned off by any trading, is because all of its P&L generated since January 2020, right before the covid crisis, is now gone.
It didn’t take long for Morgan Stanley to be proven right, and in an update pushed out on Monday afternoon, Morgan Stanley finds that retail is now out, estimating that “retail has now net sold $2.2bn today – that is the 5th biggest sell day on QDS records going back to 2016, with the 4th biggest sell day on Sep 4th 2020 at $2.3bn.”
Not surprisingly, most of the selling continues to be in Tech single-names – that alone make up more than half the total net sold – followed by Discretionary single-names, and partly offset by broad-based ETF demand of $400mm.
Of course, in keeping with accumulation, while retail is getting crushed, institutions are rolling in and according to MS calculations, as a % of total volume, retail participation is relatively low at 10.1% (14th 1y %ile) as institutions become very active here, with MS Trade Pressure showing $2.8bn (88th 1y %ile) of ES futures net bought.
In short, institutions have decided that this is indeed the bottom just as retail pukes and panic sells.
by Tyler Durden
Join: 👉 https://t.me/acnewspatriots
The opinions expressed by contributors and/or content partners are their own and do not necessarily reflect the views of AC.NEWS
Disclaimer: This article may contain statements that reflect the opinion of the author. The contents of this article are of sole responsibility of the author(s). AC.News will not be responsible for any inaccurate or incorrect statement in this article www.ac.news websites contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to our readers under the provisions of “fair use” in an effort to advance a better understanding of political, health, economic and social issues. The material on this site is distributed without profit to those who have expressed a prior interest in receiving it for research and educational purposes. If you wish to use copyrighted material for purposes other than “fair use” you must request permission from the copyright owner. Reprinting this article: Non-commercial use OK. If you wish to use copyrighted material for purposes other than “fair use” you must request permission from the copyright owner.
Disclaimer: The information and opinions shared are for informational purposes only including, but not limited to, text, graphics, images and other material are not intended as medical advice or instruction. Nothing mentioned is intended to be a substitute for professional medical advice, diagnosis or treatment.
Discussion about this post