Institutional investors have poured billions into US equities while everyday traders keep selling.
Those large accounts bought $4.1 billion in American stocks during the week ending September 18th, their third weekly purchase in the past four weeks, lifting the four-week average to $2.9 billion, reports The Kobeissi Letter.
Hedge funds added another $1.2 billion of buying over the same timeframe, pushing their own four-week average to $1.6 billion in net purchases.
Meanwhile, retail accounts moved the other way, selling $2.2 billion and extending an eighth straight week of outflows, with a four-week average weekly exit of $1.9 billion.
“Institutions are buying while retail is selling.”
While institutional investors are snapping up shares, not all names are benefiting from the buying spree. The Kobeissi Letter adds that small-cap names are witnessing massive outflows.
“The Russell 2000 ETF (IWM) posted -$3.3 billion in outflows last week, its 2nd-largest weekly outflow this year.
This also marks its 3rd-largest weekly withdrawal in nine years.
This comes as the S&P 500 has outperformed the Russell 2000 for five consecutive weeks, the longest streak in at least 12 months.
This streak is on track to extend to six weeks, which would mark the longest stretch of S&P 500 outperformance over small caps in eight years.
Since mid-August, the Russell 2000 has declined 7.3%, to its lowest level since June 10th.
As a result, the ratio of the Russell 2000 to the Nasdaq 100 has fallen to 0.09, its lowest on record.
Small-cap stocks are struggling as rates move higher.”
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