Retail investors have been buying stocks at “full speed,” which is obscuring the more cautious stance seen among institutional investors, according to Barclays analysts.
In a recent note, the bank highlighted that retail trading volumes in the U.S. are at historic highs, driven mainly by activity in “unprofitable” tech shares and “crowded shorts.”
Data from Bloomberg, LSEG, and Barclays tracking the market’s fear-versus-greed index has shifted closer to greed territory. However, separate metrics indicate that retail investor bullishness has not yet peaked.
“On a more medium term basis, equity buying among households, especially in the U.S., has remained strong over the last few quarters albeit still slightly below 2021 highs,” the Barclays team said. “As a result, equity allocation within household balance sheets remains close to the highs.”
Despite Wall Street hitting new highs recently—helped in part by a broad U.S. fiscal policy bill passed earlier this month and easing tariff concerns—“institutional buying has been more measured,” the analysts noted.
Futures positioning data from the CFTC shows that equity holdings by asset managers have stabilized but haven’t reached record levels. Meanwhile, a survey of active managers indicates “above average ownership within equities,” though “not fully extended.”
In this context, inflows into equities have lagged even as stocks continue to outperform safer bonds, they added.
Buyback support is expected to ramp up soon, with more than half of announced programs still pending execution.
“Overall, absent a growth shock, and mindful of seasonal risks, we see positioning as likely helping stocks grind higher in the second half,” the analysts concluded.
They identified the main “pain trades”—situations where most market participants are positioned one way, only to see the market move against them—as “equities up, dollar up, Big Tech down, European cyclicals and exporters up, [and] EU banks down.”
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