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Stock market at risk as retail investors abandon 'buy the dip' strategy

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The stock market is on weak footing as retail investors abandon the 'buy the dip' strategy and turn to higher yielding bonds

That's bad news for the stock market as it removes a big pillar of support for stock prices.

After retail buying activity hit a historic peak in February, net purchase activity dropped below $1 billion per day in early March. Such a decline weakens a significant pillar of support for the stock market, according to Vanda, and that makes the market more susceptible to volatile swings. "With the US Treasury 10-year yield at 4%, flows suggests growing retail interest in locking in these higher yield levels. For equities, the risk is that retail appetite for bonds could siphon away some crucial demand right before key events in March," Vanda said.

 

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