Wonder Who Was Buying Yesterday's Market Breakout? Here's The Answer

Wonder who was buying the euphoria blow-off top stock market breakout yesterday? One clear answer, according to Nicholas Colas of DataTrek Research, is answer is “Mom and Pop”. Nick looked at the publicly available trade data on Fidelity’s retail website and found net buy orders across both single stocks (mostly tech) and ETFs. And, no surprise, some bitcoin names as well.

Here's what else Nick discovered.

Retail investors have lost some of their reputation for being the “Dumb money” over the last few years. After all, anyone “Dumb” enough to own the largest US listed ETF (SPY) or the biggest tech names (AAPL, GOOG, etc) has done very well for over half a decade.

Still, whenever we see a big up day for US stocks, we can’t help but wonder what the retail investor is buying when stocks hit (yet another) all time high. Are they getting cautious and lightening up? And what names do they still like?

Fidelity Investments lets you see their customers’ Top 10 names traded, in real time if you have an account and one day-delayed if you don’t.
Here’s some color on today’s market action, courtesy of that information source:

  • Fidelity’s retail accounts were net buyers in 9 out of the top 10 names traded by their customers. The only exception: Kroger.
  • Tech names held the top 4 positions in terms of total order volumes. Ranked by total activity, they were: Nvidia, Micron Technology, Apple and Amazon.
  • In a not-so-surprising fifth spot: GBTC. Not familiar with that symbol? It is the Grayscale Bitcoin Investment Trust, and it trades over at OTC Markets. It was better to buy today at Fidelity by a ratio of 1.5:1. Just as notable: it trades at a 70% premium to bitcoin. See here: https://grayscale.co/bitcoin-investment-trust/#market-performance
  • The balance of the top 10 names traded are predominantly tech as well: Alibaba, Square, and Facebook. Non-tech names were Kroger and Bank of America. All were better to buy except, as just mentioned, Kroger.

A few other comments from the Top 25 list, available to customers (and I assume every quant hedge fund that has a Fidelity account expressly to hoover up this information):

  • There are surprisingly few ETFs. The only ones listed: UGAZ (3x Long Natural Gas), SPY and UVXY (2x the VIX). That challenges the notion that retail investors only buy ETFs – clearly there is still significant interest in single names.
  • Fidelity customers don’t seem to be fans of brick and mortar retailers, with a greater number of sell than buy orders today for Costco and Macy’s.

The upshot: Fidelity’s customer base is representative of the retail investor, and this group is certainly still a net buyer of US equities. Even on a day of all-time-highs. Call them “Dumb money” if you want… But they’ve been right for a long time and they seem perfectly content to “Buy the breakout” as much as “buy the dip."