Bbg: Meme Traders Not Buying the Dip This Time

Bloomberg headline: Retail Traders Who Drove Meme Frenzy Bail Out in Bear Market

:pushpin: Those investors this time aren’t buying the dip: Goldman

:pushpin: Consumers pulling back, sitting out volatility, says Gaffney

Hordes of day traders flooded social-media forums like Reddit and Twitter and fed each other information and trading tips. Their collective efforts famously pushed up shares of GameStop Corp. and AMC Entertainment Holdings Inc., among others, dealing a blow to big-name short sellers who had bet against those stocks.

But the tides have turned and 2022 has offered only rough trading and much gut-wrenching volatility. The gumption among the retail crowd to buy the dip has come to a test, with the strategy not faring as well in a market that’s seen the S&P 500 lose more than 20% and the Nasdaq 100 drop 30% this year. In fact, a retail-investor behavior measure by TD Ameritrade shows they have been cutting exposure to equities all year.

“The way that they’re likely going to be trading going forward is likely selling dips as they try to protect any gains that they may have or reduce further losses,” said Eric Johnston, head of equity derivatives and cross asset at Cantor Fitzgerald. “We can no longer count on the individual investor to be a backstop for this market.”