As JPMorgan's Market Intel trader Andrew Tyler writes in his market wrap after Monday's rout, "despite an attempt to recover from last week’s selloff during Monday's pre-market hours, we saw selling pressure since market open and major indices all closed lower on the day. Underlying price action was a lot better than the index level: over 60% of SPX stocks still closed in the green, and top 6 underperformers (NVDA, AVGO, META, MSFT, PLTR and AMZN) were responsible for 80% of the overall SPX selloff on Monday. "
The trigger, according to the JPM trader, was what we wrote about late on Sunday (well before Bloomberg also picked it up), highlighting the TD Cowen report according to which MSFT was canceling/postponing leases (both from a sell-side report and from Europe electronic companies ABB), which drove an aggressive decline in AI CapEx themes (JPM AI Data Centers & Power/JP11DCEN fell -2.3%). Moreover, JPMorgan Quant Strategist Emma Wu said that massive retail buying last week has turned into massive selling. She notes that “In the first 2hrs retails net sold -$1.1B, the largest outflow on record for this time of the day since Mar 2020 (-6.6z vs. 1M average $354Mn). As Tyler notes, the -$1B threshold has never been exceeded in 2024 and only 5 times in 2023. The majority of the selling flow came from single names (-$1B) with PLTR and BABA leading the outflow. All Mag7 were net sold, led by NVDA and TSLA.”
And while some may find it ironic how quickly the retail mood has flipped, it should hardly be unexpected because as we wrote just two weeks ago in ""Largest Buy Imbalance In History": Retail Euphoria Breaks All Records, Steamrolling Bearish Hedge Funds" when we profiled the absolutely record buying by retail investors, easy come and well, even easier go... and sure enough, what was just days ago record retail buying has viciously reverse into even more record retail selling!
