In the world of investing, institutional investors are making big moves by pouring billions into US equities, while everyday traders are on the selling side.
According to The Kobeissi Letter, large accounts bought a staggering $4.1 billion worth of American stocks during the week ending September 18th. This marked their third weekly purchase in the past four weeks, boosting the four-week average to $2.9 billion.
Hedge funds also joined the buying spree, adding $1.2 billion in purchases over the same period. This pushed their own four-week average to $1.6 billion in net buying activity.
On the flip side, retail accounts continued their trend of selling, with a total of $2.2 billion in outflows. This marked the eighth consecutive week of selling, with an average weekly outflow of $1.9 billion over the past four weeks.
“Institutions are buying while retail is selling.”
While institutional investors are actively acquiring shares, not all companies are reaping the benefits of this trend. The Kobeissi Letter noted that small-cap names are experiencing significant outflows.
“The Russell 2000 ETF (IWM) posted -$3.3 billion in outflows last week, marking its 2nd-largest weekly outflow this year.
This also represents its 3rd-largest weekly withdrawal in nine years.
At the same time, the S&P 500 has been outperforming the Russell 2000 for five consecutive weeks, the longest streak in at least 12 months.
This streak is projected to extend to six weeks, which would be the longest period of S&P 500 outperformance over small caps in eight years.
Since mid-August, the Russell 2000 has seen a decline of 7.3%, reaching its lowest level since June 10th.
As a result, the ratio of the Russell 2000 to the Nasdaq 100 has fallen to 0.09, the lowest on record.
Small-cap stocks are facing challenges as interest rates rise.”
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