Flight to safety continues? JPMorgan: Even a ceasefire can't stop US retail investors from selling!

News of the ceasefire triggered a market rebound, but US retail investors chose to sell. The latest Retail Radar report from JP Morgan shows that retail investor behavior has undergone a fundamental shift—from "buying the dip" to "selling into strength," with an increasingly defensive stance.

According to Chase Trading Desk, JP Morgan released a report Wednesday stating that retail trading activity this week is extremely subdued, with activity at just the 1.2% historic percentile. Despite the day's oil price experiencing the largest single-day drop since 2020 and the VIX fear index falling below 20, signaling an improvement in market sentiment, retail inflows have not recovered—intra-day saw the largest net ETF sale in nearly a year, and at the close, ETF holdings dropped to their lowest levels in over ten months (0.4% percentile).

This shift in behavior has direct implications for the market: Retail investors are clearly skeptical about the sustainability of the current rebound. Their defensive position changes could exert ongoing pressure on broad-based index ETFs and cyclical sectors such as energy and industrials, while tech leaders (Mag7) remain one of the few directions for net retail buying.

Retail Activity Drops Sharply, Rebound Fails to Boost Confidence

JP Morgan data shows that for the week ending April 8 (April 2-8), retail inflows fell to $4.8 billion, well below the average weekly level of $6.6 billion for the past 12 months. Retail investors continued to favor ETFs (net buying $5.3 billion), while individual stocks saw net selling of $460 million.

Intraday data more intuitively reflects this shift. At 11 a.m., retail buying activity was at just the 1.6% percentile for the past year, with the scale of net ETF sales hitting a one-year high. By 1 p.m., retail briefly shifted to modest net ETF buying and began to cover individual stocks; but by the close, ETF exposure fell back to the 0.4% percentile, and net buying of individual stocks stayed at a low 7.6% percentile.

The report notes that this pattern confirms the ongoing behavioral shift among retail investors in the past month: Retail has switched from "buying the dip" to "skipping the dip and selling into strength," with overall positions becoming more defensive.

Broad-Based ETFs See Net Selling, Retail Investors Skeptical of Rebound

Retail skepticism over this rebound is especially evident at the ETF level. JP Morgan’s report shows retail buying of broad-based stock ETFs hit a year low (z-score of -2.3), with continued net selling of SPY and TQQQ until the close.

In sector ETFs, net sales were also significant (0.4% percentile, z-score -3.1), with 3x Semiconductor ETF SOXL seeing the largest selloff (0.8% percentile). Meanwhile, retail investors reduced their short oil positions via inverse ETF SCO (z-score -7.7) and increased holdings of oil ETF USO (75% percentile), indicating a change in their outlook on oil prices.

On the ETF buy side, retail investors this week favored multi-asset fixed income ($214 million net buy), large-cap growth ($209 million), broad-based multi-cap ($192 million), and dividend strategies ($182 million), while energy (-$98 million) and tech (-$81 million) sector ETFs saw net selling.

Energy Stocks Sold Off, Mag7 Still a Safe Haven

For individual stocks, retail net selling covered nearly all sectors, with energy and industrials leading the decline; communication services was the only exception.

The continued selloff of energy stocks was corroborated by fundamental factors. Exxon Mobil disclosed in its 8-K filing that production interruptions in Qatar and the UAE are expected to result in a roughly 6% quarter-over-quarter drop in global oil and gas equivalent output, with two damaged LNG trains (about 3% of 2025 upstream output) likely needing a lengthy repair period, and Middle East turbulence projected to pose a $70 million quarter-over-quarter profit drag.

By contrast, Mag7 remains one of the few directions for net retail buying. This week, retail investors bought Tesla ($494 million), Nvidia ($298 million), Microsoft ($282 million), META ($140 million), Apple ($100 million), and Google ($62 million); only Amazon saw net selling (-$36 million). META received additional inflows, partly due to its Super AI team releasing a new model.

JP Morgan data shows that non-retail investors sold a net $8.5 billion last week, above the 12-month average of $7.3 billion. Meanwhile, futures traders bought about $5.2 billion net, mainly driven by S&P 500 futures (ES, about $1.8 billion) and Nasdaq 100 futures (NQ, about $3.4 billion), which diverged somewhat from the defensive operations of retail investors.

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The above highlights are from Chase Trading Desk.

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