Institutional investors have significantly increased their purchases of US equities while retail traders continue selling, according to data from The Kobeissi Letter.
During the week ending September 18th, large institutional accounts bought $4.1 billion in American stocks, marking their third weekly purchase in four weeks. This brought their four-week average to $2.9 billion in net purchases. Hedge funds contributed an additional $1.2 billion during the same period, with their four-week average reaching $1.6 billion.
Retail investors moved in the opposite direction, selling $2.2 billion in equities and extending an eighth straight week of outflows. Their four-week average weekly exit totaled $1.9 billion.
Small-Cap Weakness Amid Market Rotation
The institutional buying activity has not benefited all market segments equally. Small-cap stocks have experienced significant outflows, with the Russell 2000 ETF (IWM) posting $3.3 billion in outflows last weekâits second-largest weekly outflow this year and third-largest weekly withdrawal in nine years.
The S&P 500 has outperformed the Russell 2000 for five consecutive weeks, the longest streak in at least 12 months, and is on track to extend to six weeks. This would represent the longest stretch of S&P 500 outperformance over small caps in eight years.
Since mid-August, the Russell 2000 has declined 7.3 percent to its lowest level since June 10th. The ratio of the Russell 2000 to the Nasdaq 100 has fallen to 0.09, its lowest on record.
