Retail Capitulation | Complete Disaster.

hey everyone me Kevin here coming to you

with a shirt straight out from barrows

and a sponsor from MooMoo but in this

video we've got to look a little bit

closer at what's going on with retail

investors first I want to start with

retail capitulation there are many

different measures of retail

capitulation we've been tracking a

couple of these some reports by for

example JPMorgan suggests that retail

has started capitulating however reports

by Vanda track suggest the opposite that

retail is buying less but not quite

capitulating however there is a there's

a clear Trend that I think is worth

paying attention to and one is that

retail yes is buying less they are

buying fewer stocks so you are seeing

this inflection point to the downside as

potentially we hit closer to the bottom

of the market but retail is doing

something very interesting and it has to

do with buying the dip in very certain

stocks and I'm going to talk about

exactly those in this video we'll also

talk about what retail Tales response

has been relative to institutions and

also bonds so we'll talk about all of

that in this video first though it's

worth noting the amount of pain that

retail is enduring here is a chart of

the pain retail has endured in 2018

retail briefly endured a Fed tightening

period here with a decline in stocks of

up to about 25 percent for a very very

short period of time in December of

2018. this was the FED tightening period

during the time which we were talking

about well Donald Trump at least was

talking about in mainstream media was

talking about this idea that oh Jerome

Powell should be fired for hiking

interest rates and it really wasn't

until Jerome Powell you turned around

December 18th to the 22nd of 2018

that socks started recovering and so

what we notice is retail actually then

had to deal with a larger decline about

a 28 decline here during the covid-19

crash and folks look at the pain we're

dealing with relative to these prior

pain periods look at what we're dealing

with now not only are we dealing with

pain that is in excess of a portfolio

drawdown of between 30 to 35 percent so

let me make that clear if your portfolio

is down 30 to 35 percent you're just

normal you're a normal investor in this

environment look there are there are

some of us who have outperformed there

are some of us who have underperformed

but the average it's just bad okay it's

not great nobody's bragging about their

stock portfolio really in 2022 oh with

the exception of the anomalies which

generally the anomalies to make yourself

feel better suck all of the other years

they suck nine out of ten years and they

do great one out of ten years okay

because they're always making these

crazy crazy YOLO bets but anyway

the amount of pain we're suffering is so

much larger than we actually had in the

last two periods of pain the 2018

tightening cycle and the covet pandemic

where we really had that v-shaped

recovery right so it's quite interesting

to pay attention to but not only that

let's take a look at inflows

now what's really fascinating about this

particular chart is it shows the

resilience of retail it shows us that

the S P 500 hit relative high levels

over here at the end of July before the

Jackson Hole Symposium or Jerome Powell

really talked about this continuation of

tightening and really drove the market

right back down because that seems to be

their goal we would reduce our wealth

right but what's phenomenal is when we

get over here yeah you see these green

bars here these that I'm sort of

highlighting right now those are retail

inflows into the market and you'll

notice at least according to Vander

track they have not been negative

they've been close they were very very

close here they were very very close

here but according to Vander truck we've

actually not turned negative now others

have reported that we have turned

negative but what's remarkable is when

you see these larger drawdowns see this

drawdown right here look at that sharp

drawdown look at those inflows look at

that draw down right here on the left

look at those inflows look at this

drawdown right here look at those

inflows

my point is when we see this Market

turned down

retail is doing what they should be

doing and that in my opinion is actually

something to be proud of it's buying the

dip now buying the dip has been a

painful strategy if you started back in

January it would have been better for

you to just sit on the sideline for as

long as possible whether you sat on the

sideline for two months or three months

or four months or five minutes or six

months the more you sat on the sidelines

the better

but generally we look back at buying the

dip and we're like damn you probably own

a lot more shares today

than you owned last year

and how do you think that's going to pay

out in the next five years personally I

I'm very very optimistic about that but

I will say it's not just retail becoming

optimistic take a look at this this is a

chart right here that shows you the

change in sentiment okay I'm gonna

ignore the discussion about how this is

a puts a premium chart we're going to

talk about this as a change of Direction

in institutional versus retail

sentiment wise okay

retail is this green stuff over here

this is basically how much money we're

spending on puts okay it's been kind of

stable hey we were near zero here but

we've kind of been stable bobbing around

this sort of line over here right

the point here though is to notice this

inflection here

institutional investors are reducing the

amount of money they're spending on

shorting to the downside in other words

institutional is becoming more bullish

that doesn't mean they're right look

they became more bullish in March when

the Federal Reserve had the fomc meeting

uh that really led to a rally they

became more bullish in June before the

Jackson Hole Symposium right and during

the times that institutions become more

bullish like here and here we could see

that the S P 500 goes up here and here

so we actually get increases when

institutions become more bullish that's

roughly what we're seeing here and here

we're seeing that same sort of

bullishness come back it's not so much

retail pessimism that actually drives

the market lower it's institutional

pessimism that drives the market lower

and institutional turns to bullishness

that drives the market higher but point

is through and through retail is buying

the dip now I want to talk about

specific stocks that retail is buying

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below welcome back so let's take a look

at this retail purchases on a 21 day

moving averages and millions of dollars

and this is only the chart of fang Mt

now the t is debated as to whether the t

is Tesla or Twitter but the others are

relatively clear Fang Mt is generally

deemed to be Facebook

Apple

Amazon Netflix Google Microsoft and

Twitter

it's generally what we have but Twitter

is getting delisted so it's kind of

going to screw this up but the point is

look at the Fang Mt purchases

we had a spike here in the summer for

these Mega cap names Amazon Apple

Facebook Netflix look at the recent

Spike though here really in August and

September folks in the retail Community

are convinced

that Fang is the future now I personally

really dislike Facebook I even said that

after the or before their last earnings

call I've never been a big fan of

Facebook we talk about this in the

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folks to me this is this is not terribly

wrong I'm a big fan of some of these big

names with the exception of Facebook I'm

a big fan of Apple I think they grow

margins and not only do they grow

margins but they also grow sales in

contrast with what's actually happening

in a broader PC market sure services and

iPhone sales are down sure but we knew

that Google reported that as well in the

Play Store and weakness in the

smartphone sector has been known for a

long time

now when it comes to Google sure we're

going to see weakness in advertising and

we've got too many people at Google they

took too long to respond to this

recession but these are names even

Amazon that are going to be with us for

a long term in the a long time in the

future especially Microsoft now I'm not

the biggest fan that margins at Amazon

are declining as they reduce some of

their prices to make sure they can hold

on to some of more of their customers

Microsoft is probably going to have to

deal with some of that as well within

their Cloud business but these are the

Power Players

again it's a sign that retail continues

to trust equities when the big names

have inflows equities are still trusted

what else do we have though well we have

to talk about this

this one is specifically Netflix Netflix

purchases

huh

so Netflix purchases Netflix isn't one

that I'm super excited about however I

will say they've returned to growth and

they've actually impressed pretty

decently just in the last two weeks

Netflix has increased 32 percent in its

share price it's gained about 67 dollars

worth of share price and in the summer

come May and June these folks were

trading for about 187 now they're

trading for nearly 300 per share a huge

movement in Netflix and the bulk of the

purchases from retail here happen to be

in the October month and I'll tell you

Netflix has been rocketing in October

now hopefully retail has been able to

enjoy some of that 30 gain that we've

had since the bottom October 11th the

recent bottom or the summer bottom in

the 160s and 180s but again this is a

reiteration that retail is confident in

equities for the long term that's it's

bullish here's another chart this is a

chart that shows us retail purchases of

bond ETFs now this is an interesting one

because what you'll actually find is

that retail purchases of bond ETFs we're

at high levels over here in August when

stocks were at higher levels remember we

kind of rallied in August as treasury

yields fell and mortgage rates fell uh

and then we kind of hit a wall once that

Jackson Hole Symposium happen in

September that Jackson Hole meeting from

Jerome Powell

ah that let's just say it hurt uh and

that came uh right at the end of 2020 uh

or August 2020 too that was on August

26th and that's kind of a right if we

kind of Mark an August 26th let's go

ahead and do that we'll go ahead and

draw

up uh from the 26th right here look at

that that's Peak retail buying and

that's all of a sudden when the bond

ETFs started falling and Retail fell out

of favor now some people say that well

retail just got excited because the

prices of these Bond ETFs were going up

but then again we had a feeling that

potentially we had reached Peak yields

and we hadn't yet because for example if

you jump over now to the CNBC yield

track or just go to the CNBC 10-year

yield tracker and go ahead and pop over

to oh I don't know let's go to three

months over here because that'll show us

August the yields were super low over

here in August but they just came off of

a high I'll go out to the sixth month

and you'll see that trough see that

trough here in August retail thought

that's it we hit Peak yields and so why

not buy the bond ETFs then so they were

actually thinking by the dip we peaked

out with yields now bonds rally they

were just too early but now folks now

we're starting to get the thought again

that did we just hit P yields remember

those GDP numbers that we just got this

morning showed cooling inflation

everybody's looking for signs of cooling

inflation boy those GDP numbers were

exciting now I want to go through some

specific stocks as well look at the

retail net purchases on a five-day

period here in millions okay look at

what retail is buying the biggest by far

in terms of retail purchases

Tesla by a factor of 2x Amazon meta

coming in after that I highly think

that's a mistake I think that uh VR and

augmented reality is 20 years too early

the metaverse is 20 years too early

Nvidia big fan of this big fan of Tesla

big fan of Apple Netflix you know I'm

moderate on that I'm not the biggest fan

here I'm actually a bigger fan of of of

uh Disney myself uh AMD big fan big fan

absolutely Alibaba okay this is another

thing vandertrack is telling us that

Chinese adrs are being bought heavy on

the dip you've got Neo over here as well

I personally think that's a mistake I

would rather buy Taiwan semiconductors

right here much rather they have less

exposure to China and I'd much rather be

in tsmc for art for artificial

intelligence chips just chips in general

that I would want to be in you know the

consumer sector for Chinese absolutely

not not with that housing collaps are

going again we could see a 10-year

period of pain for the Chinese consumer

and adrs are something that have are the

listing risk they have auditing risk

they're just something that I really

don't want to touch uh so uh you know if

you want a dividend stock here you've

got a t you've got Chevron uh you've got

Coca-Cola which smashed earnings you've

got Intel which had okay earnings today

Austin Dental is really a Warren Buffett

you know shoulders play following the

leadership of of uh Warren Buffett fine

Shopify actually surprised really nicely

today so I have to say their earnings

call just straight up sucked we went

through it with course members and the

earnings call was not good it was not

very insightful if anything uh the

executives were really trying to dodge

the fact that their margins are

suffering and their growth just isn't

the way it was so we'll see uh you've

even got Nike in here anyway uh these

are some interesting stats to pay

attention to just to see some of the

behavior by retail so hey if you found

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see in the next video good luck everyone

goodbye