So who bought the dip?

Last week the S&P 500 fell 2.1% – it’s worst weekly drop of 2013 so far.

Hedge funds sold as did institutions. But retail investors were out there buying on a net basis according to the latest equity flows report from Merrill’s Quant Strategy group. This is rather amazing.

Four important tidbits from the report:

* Not only did the retail, what Merrill terms their “private client” segment, do all of the buying – they bought all ten S&P sectors on a net basis. Also amazing. This is only the eighth week in which retail investors have done this kind of broad-market buying since 2008. The last time we saw them buy the whole market was in January.

* The hedge fund segment sold again last week, three in a row. They are now net sellers of the equity market on the year – they were only net buyers during the March and April period of new highs, because, en masse, they are essentially benchmark-chasing pussies who jump in and out of the tape like they’re “managing risk” and then lever up like maniacs when they begin to trail the markets (not BofA’s words, mine).

* Small caps saw net sales from all three groups.

* While all three segments – private client, hedge fund and institutional – posted a combined a net sale of stocks last week, the one sector that all three groups actually added to was Technology. It was a record week for flows into tech stocks, the first over $1 billion week since 2008. BofA has previously determined that tech is actually the best performing sector during periods of rising interest rates so this makes sense. Chart below:

Source:

Equity Client Flow Trends – Bank of America  Merrill Lynch Global Research