To The Moon

1. Retail investors are rewriting their own story

Over the past year, U.S. retail investors have followed a virtually unchanging rule of thumb: buy on dips. However, the latest Retail Radar report released by JPMorgan on April 8 reveals a fundamental shift—retail investors have switched from a "buy on dips" strategy to a defensive stance of "sell on rallies and wait on dips". This is not a one-day anomaly, but a new behavioral pattern that has solidified over the past month. On a "bullish" trading day when oil prices recorded their largest single-day drop since 2020 and the VIX fell below 20, retail capital inflows not only failed to increase but remained at extremely low levels throughout the day—overall activity was at just the 1.2th percentile of the past year. A group that once reflexively rushed in at every price dip is now choosing to pull back in the face of clear positive news—this in itself is a signal that demands serious attention.

2. What does intraday trading reveal about market hesitation?

Data at a finer granularity is more revealing than daily figures. At 11:00 a.m. on April 8, when news of a Middle East ceasefire drove a market rally, retail investors’ intraday buying volume was at the 1.6th percentile of the past year—in other words, this was among their weakest reactions in the entire year. At the same time, ETFs saw their largest intraday net selling in a year, as retail investors actively reduced their exposure to broad-market ETFs such as SPY and TQQQ. This represents a rare deviation: historically, retail investors typically bought individual stocks and ETFs in the morning; now, they sell ETFs in the morning and tentatively buy back individual stocks in the afternoon, with their ETF exposure at the close hitting a ten-month low (0.4th percentile).

This intraday pattern of "sell first, buy later, then hesitate" captures the current mindset of retail investors more accurately than any sentiment indicator: it’s not that they aren’t paying attention to the market, but rather that they no longer believe a rally is worth chasing.

3. What does a weekly traffic volume of 4.8 billion indicate?

Let’s shift our focus from a single day to the entire week. During the week of April 2–8, net retail capital inflows fell to **$4.8 billion, well below the weekly average of $6.8 billion over the past 12 months**. Structurally, ETFs saw positive inflows of $5.3 billion, while individual stocks experienced net outflows of $460 million. Behind this apparent trend of "shifting from stocks to funds" lies a more complex set of choices:

• Retail investors favored fixed-income ETFs (+214 million), equity-style funds (+209 million), and dividend-focused strategies (+182 million), while net selling sector-specific equity ETFs (energy: -98 million; technology: -81 million)—a classic defensive allocation.

• Purchases of broad-market equity ETFs totaled just $45.1 million, with a Z-score of -1.9, placing them in the 2.4th percentile over the past year—nearly at an absolute low.

• At the same time, they continued to buy into the AI/data center thematic basket (JPAMAIDE) and Mag7 components, though the scale of their purchases has been shrinking.

Retail investors are not pulling out entirely, but rather engaging in selective trading within a very narrow range, while shifting most of their capital into more conservative instruments.

4. Mag7's magnetic force is still present, but its gravitational pull is weakening.

Against the backdrop of overall capital contraction, the "Big Seven" remain the top destinations for retail investor trading volume. This week, TSLA saw net purchases of $494 million, NVDA $298 million, MSFT $282 million, and META $140 million. However, viewed within a broader context, the Mag7’s overall weekly outperformance relative to the S&P 500 was -2%. Since the start of the Middle East conflict, the index has fallen 2.4% cumulatively and has underperformed the benchmark by approximately 8 percentage points year-to-date (Mag7 -9% vs. S&P 500 -1%).

A growing gap is emerging between retail investors’ persistence in holding these stocks and the stocks’ actual market performance. A question worth asking is: When Mag7’s narrative is no longer driven by earnings growth but by the release of new models from AI super-intelligence teams (such as META, which saw a capital inflow of +0.6z this week due to a new model from a super-intelligence team), is retail investors’ loyalty based on fundamentals, or on the continuity of the narrative?

5. The sell-off in energy stocks signals a reassessment of geopolitical pricing

Net selling by retail investors in individual stocks was driven primarily by the energy and industrial sectors, with communication services being the sole exception. The most heavily sold stocks were highly concentrated: XOM (-1.3%), CVX (-1.1%), and OXY (-0.7%). This selling coincided with a roughly 5% one-day decline for each of the three major oil companies on April 1, while the S&P 500 actually outperformed the energy sector by 6 percentage points that day.

The catalyst behind this is not merely falling oil prices. ExxonMobil disclosed in its latest 8-K filing that production disruptions in Qatar and the United Arab Emirates will result in a month-over-month decline of approximately 6% in global oil-equivalent production; damage to two LNG production lines may require a lengthy repair period; and the profit headwinds stemming from the situation in the Middle East amount to approximately $700 million. Retail investors’ selling is not a panic sell-off, but rather a belated reassessment of fundamentals—by selling energy stocks amid the positive news of a ceasefire, they are effectively pricing in the dissipation of the geopolitical premium.

6. The surge in investments in healthcare stocks against the market trend masks policy arbitrage

While energy stocks were bleeding, a less obvious capital trend emerged. Shares of insurance companies offering Medicare Advantage plans surged collectively by 7% to 16% around April 7—including UnitedHealth (UNH), Humana (HUM), Alignment Healthcare (ALHC), and CVS Health (CVS). The immediate catalyst was the U.S. government’s agreement to raise Medicare Advantage payment rates for fiscal year 2027 by approximately 2.48%, an improvement of 239 basis points over the initial proposal, which is expected to add more than $13 billion in additional payments to the industry.

Retail investors’ reaction times reveal an interesting information gap: they were net sellers of UNH ($42 million sold on April 7), net buyers of CVS ($2.3 million), and engaged in massive selling of ALHC ($2.9 million, -6.25%). Faced with the same policy tailwind, retail investors executed opposite strategies across different stocks, indicating that their judgment of individual stocks remains heavily reliant on short-term price momentum rather than structural analysis of policy transmission.

7. The Undercurrent of Meme Stocks: The Clash Between Hedge Fund Short Selling and Retail Investor Buying

A cross-analysis of social media buzz and capital flows has revealed another powder keg. Among the stocks tracked by JPMorgan that exhibit high attention, high retail buying, and high short interest, names such as **Virgin Galactic ( $Virgin Galactic(SPCE)$ , short interest 21.7%), Lucid ( $Lucid Group Inc(LCID)$ , 32.7%), and MARA Holdings (29.5%)** appear on both the retail buying and hedge fund shorting sides. Among these, SOUN has seen cumulative net retail buying of $115 million since November 2025, while its short interest stands at 38%—a figure that has risen by 10 percentage points since January 2026.

Once this dynamic—where retail investors and hedge funds are betting against each other—encounters an abnormal surge in trading volume, it could trigger a short squeeze or a retail investor stampede in a single stock. Charts from JPMorgan show that the position gradient between retail investors and short sellers in certain securities (such as XLE and LUNR) has turned positive—meaning the probability of a short squeeze is decreasing, while the risk of losses for retail investors is increasing.

8. Options Market: Stable Participation at High Levels

Retail investors’ behavior in the options market offers a complementary perspective. The rolling one-month average of retail option trading volume as a percentage of total market volume stands at the 98.2nd percentile. Although it has recently pulled back slightly from its peak, it remains at historically high levels. The most actively traded options are concentrated in TSLA, $Micron Technology(MU)$ , $NVIDIA(NVDA)$ , $Advanced Micro Devices(AMD)$ , $Apple(AAPL)$ , and $SanDisk Corp.(SNDK)$ —all of which are technology and semiconductor stocks.

The largest single position on the long side of Delta is $Tesla Motors(TSLA)$ ($361 million), while the largest positions on the short side of Gamma are SPX (-$306 million) and SPY (-$175 million). This portfolio structure—buying call options on individual stocks while selling volatility on indices—indicates that retail investors are engaging in a contradictory strategy with options: betting on upward price movements in individual stocks while shorting volatility on indices to collect premium income. Should a systemic market shock occur, both positions would suffer losses simultaneously.

9. A sign that it’s not just retail investors: There are people buying the dip in the futures market.

The pullback by retail investors does not tell the whole story. Non-retail investors net sold $8.5 billion last week, exceeding the 12-month average of $7.3 billion. However, futures traders net bought approximately $5.2 billion during the same period, with about $1.8 billion in ES (S&P 500 futures) and about $3.4 billion in NQ (Nasdaq 100 futures).

This creates an intriguing dynamic: retail investors are pulling back in the spot market, non-retail investors are selling in the spot market, yet professional traders in the futures market are establishing long positions. Who is buying in the futures market and why—to hedge existing short positions, to open new positions, or to speculate on a rebound following the ceasefire—remains unclear at this stage, but it indicates that divergences in market sentiment are intensifying.

10. Where is the next key variable?

A fundamental shift in retail investor behavior—from "buying on dips" to "selling on rallies"—could be dismissed as mere noise if it lasted only a week or two. However, data from JPMorgan shows that this shift has persisted for a full month and has not reversed even amid this week’s "perfect combination of positive factors": plummeting oil prices, a declining VIX, and the announcement of a ceasefire. This is no longer noise; it is a structural trend.

What really deserves our attention isn’t whether retail investors will return—they will; retail investors will always flood back in at some price point—but rather **what kind of catalyst will break this defensive stance**. Will it be Mag7’s earnings season? A signal from the Fed that it will cut rates? Or another price gap large enough to reignite FOMO? Until then, a retail investor base with nearly 100% option participation at all-time highs but a spot market that continues to contract is like an archer who has drawn the bowstring to its limit but refuses to let go. The longer the string remains taut, the harder it is to predict the direction the arrow will fly.

$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $Amazon.com(AMZN)$ $Meta Platforms, Inc.(META)$