Single Stock Inflows Near Historic Peaks

© Stocksak. Stocksak. Single Stock Inflows Near Historic Highs – BofA

By Senad Karaahmetovic

Jill Carey Hall, Bank of America equity strategist, noted that stocks saw a third consecutive week of large inflows last week. Stocks closed 4.7% higher. Overall, Bank of America’s clients were buying equities for the sixth consecutive week.

While institutional clients were buying stocks, hedge funds and retail clients led the buying. Sector-wise, clients bought stocks in seven sectors, including Tech, Health Care, Communication Services, and Communications Services.

The largest outflows were recorded in Financials and Energy stocks. The analyst noted that Consumer Discretionary flows recently turned negative for the first time since April, while Communication Services’ 4-week average inflows are at record highs.

“Over the last three weeks, inflows into single stocks (as a % of S&P 500 mkt. cap) were in the 99th percentile of history since ’08 and two standard deviations above average, and still in the 92nd percentile excluding corp. client buybacks,” Carey Hall wrote to clients in a note.

“Prior times 3-wk. single stock flows as an % of mkt. These extremes were followed by above average. S&P 500 returns over the subsequent 1/3/6/12 months (i.e. wasn’t a contrary indicator). However, the majority of previous extreme (+2 st.) instances were not. dev.) Inflows after the Global Financial Crisis were often preceded by extreme ( dev.) outflows in the several months prior – not the case this time. Cumulative $ inflows YTD have also been the most positive in our data history,” the analyst concluded.

As far as futures positioning is concerned, Citi’s Chris Montagu noted that changes in this aspect were limited despite a big rally in stocks. Bearish bets have continued to attract new investors with short levels currently nearing the lowest levels in the last three years.

“Moderate amounts of new long flows led to falling bearish positioning in the S&P, whereas Nasdaq short positioning extended further despite recent positive price momentum,” the analyst wrote to clients.

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