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Retail traders may have finally given up on buying the dip

During the market’s recent rout, JPMorgan equity analysts spotlighted a pivot away from some high-flying Trump-related trades into plain vanilla index ETFs.

Matt Phillips

3/3/25 3:37PM

Crypto and stock markets got a brief boost Monday as the president touted a plan to use US taxpayer money to buy a broader range of cryptocurrencies for a theoretical “strategic reserve.”

But they couldn’t hold early gains, thanks in part to President Trump’s threats of tariffs and a big slump in market behemoth Nvidia, which pushed both the S&P 500 and the Nasdaq into negative territory.

It makes you wonder whether the Bank of America analysts who predicted the popping of the “bro bubble” might be on to something.

During the stock market carnage that began February 19 and rolled through most of last week, JPMorgan analysts who keep a close eye on retail trading activity noticed something. In a Wednesday note last week, they spotlighted strong selling of top retail favorites like Palantir, alongside strong buying of tried-and-true diversified ETFs.

Analysts used z-scores to indicate the size, in terms of standard deviation, of the waves of buying and selling:

“Over the week, almost entire inflows into ETFs (+$3.4B) were offset by single stocks (-$3.2B). S&P and Nasdaq ETFs continued to dominate the inflows, collectively accounting for $1.5B (+2z). On the other hand, bitcoin-related ETFs led the outflows (IBIT -1.6z, GBTC -1.2z) as cryptocurrenecy almost erased the entire ‘Trump bump’.
Among single stocks, all sectors were net sold, led by tech (-$1B). PLTR accounted for nearly a half of the outflow (-$480Mn) within tech, marking the largest amount on record since 2015 (Figure 2). Super Micro Computer also contributed meaning outflows (-2.5z).”

It’s worth noting that the last time Palantir was getting badly beat up in the markets, back in January, JPM analysts reported that retail traders flocked to buy the dip in the data analytics and software company, as well other favorites. That suggested widespread retail confidence in a market recovery. (To be clear, Palantir is bucking the broader trend today, posting a solid gain.)

But during the latest downturn, for whatever reason — policy uncertainty, weakening economic data, tariffs, or broad worries about the sustainability of the AI trade — the rampaging animal spirits that emerged after the president’s election last November have evaporated.

Of course, that doesn’t mean the market is doomed. It could just be that stocks, which were reaching fairly high levels of valuation at more than 22x forward earnings, were in desperate need of a sell-off, before it consolidates and moves higher.

It’ll be interesting to keep watching retail traders to see what their confidence level is that the postelection rally can be revived.

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Retail traders are dumping Bloom Energy after near 300% rally, says JPMorgan

Retail traders are swarming for the exits in fuel cell company Bloom Energy, causing what was once a near 300% year-to-date rally to sour.

JPMorgan strategists led by Arun Jain flagged that Bloom’s net imbalance — the balance of buying versus selling among retail traders — was exceptionally negative as of 11 a.m. ET, even worse than during its double-digit drop on Wednesday.

The fuel cell company, which counts Oracle among its customers, eclipsed a market cap in excess of $20 billion earlier this week despite generating less than $2 billion in sales over the past year.

Wall Street began to sound some alarm bells about the extent of Bloom’s run this week, with Jefferies downgrading its rating for the stock to “underperform” from “hold” on Wednesday while Bank of America analysts wrote, “We are still not buying into BE’s AI hype.”

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There was a story in China’s official China Daily where executives laid out their plans for the language-learning app’s push into the People’s Republic, which has been a focus of Wall Street analysts on recent post-earnings conference calls.

China, where the company began doing business in 2018, is Duolingo’s fastest-growing market for its language-learning app. It’s also the largest source of test takers for its Duolingo English Test proficiency exam business, a recent focus for management spotlighted in its recent Duocon product announcements.

It’s hard to say if the China Daily story is the reason for today’s upswing in the stock, but given the necessities of working within a country controlled by the Chinese Communist Party, a relatively favorable story appearing in its international propaganda organ suggests a relatively healthy working relationship is developing there.

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Oklo dove Thursday after an SEC filing showed company director Michael Klein sold some $6.7 million in stock in transactions that, importantly, were not part of a pre-set insider sales plan.

Wall Street analysts forecast that the nuclear power startup will make losses for years to come. But the company’s ties to OpenAI CEO Sam Altman, who served as Oklo’s chairman until April, have helped make the stock a favorite of retail traders and a popular momentum play.

Even after today’s stumble, it’s up more than 400% this year and nearly 1,300% over the past 12 months.