Goodbye BTFD: Retail Is Now "Selling Rips"

Two days ago, in a post titled "Buy The Dip" Is Dead", we wrote that when looking at the latest retail data from Vanda Research following Tuesday's powerful rip in stocks, we said that despite Wednesday's powerful morning meltup which was driven by ceasefire optimism, "the retail bid was notably absent today" and noted that in the first 2 hours of trading, "instead of buying, retail actually sold $5.5mn of US-listed single stocks"

Wednesday's selling followed an especially ugly Monday when retail posted its first day of net selling in single stocks since November 2023, unloading $20.6 million in shares, according to Vanda Research. That selling came as the S&P 500 Index (SPY) rallied after Trump eased back on his threat to bomb Iran's energy infrastructure, a backdrop that suggests even a rebound in the broader market is no longer drawing the same level of retail enthusiasm.

"In other words", we concluded, "instead of BTFD, retail is now STFR."

One day later, JPMorgan agreed, calling its latest Retail Radar Note, "Selling Rips." 

The largest US bank found that indeed as expected, BTFD is now dead, as retail investors continued to scale back purchases, posting their slowest week in 4 months - now 70% off their pre-conflict levels - amid whipsawing sentiment around the potential path to conflict resolution.

Echoing our observations, JPM writes that Monday stood out as particularly weak: despite a broader return to market enthusiasm, retail appeared to capitulate — turning net sellers for the first time in 9 months as they "sold the rip", led by a 3.6%ile day in single names. For the full week, retail flows declined further to $3.0B, below the 12-month avg of  $6.8B/week. Retail investors continued to favor ETFs (+4.4B) over Single Stocks (-$1.4B).

The hiatus proved short-lived, with flows normalizing the following day - though in a cautious tone. While purchases were relatively healthy on Tuesday (41%ile), hesitation soon resurfaced: retail returned to net selling in single stocks on Wednesday (15%ile), even as markets rose. 

Overall, retail investors are showing early signs of rotation toward a more defensive stance — across both ETFs and single stocks. Within  ETFs, short- and intermediate-term Treasury products were the second most purchased category (not that Treasuries are doing any better), behind broad-based equity ETFs. Meanwhile, GLD’s capitulation began to weigh, prompting a modest trim in positioning (−1.7z on the week), though flows turned slightly  positive again on Wednesday.

Lastly, ramped-up purchases of short and inverse ETFs over the past two months (e.g. SH and SDS)...

... helped drive retail investors' outperformance versus a dollar-cost-averaging benchmark in QQQ and SPY.

While broad market participation declined, and dips were not bought, single-stock activity especially was the weakest since December. Retail investors continued to buy the Mag-7 at moderate levels (consistent with their typical pattern)...

... they were net sellers across every other sector - led by Energy, Tech ex–Mag 7, and Industrials—with Staples the only exception.

At the single-name level, AMD saw the heaviest selling pressure, as retail positioned to take profits following the company’s announced price hikes, with options positioning also contributing to negative exposure in the name.

More broadly in options, MU posted the largest volume increase among top 10 names, pushing overall exposure slightly more delta-positive over the past week.

More in the full JPM note available to pro subscribers.