about 2 years ago • 1 min
Tech stocks have had a tricky start to the year, with the Nasdaq 100 Index dropping 6.8% so far in January. But while such a sell-off would normally attract a wave of dip buying from smaller investors, their enthusiasm currently appears on the wane.
The Nasdaq 100 fell 2.6% on Tuesday as US markets reopened after Martin Luther King Day. That sent the ProShares UltraPro QQQ exchange traded fund (ticker: TQQQ), which tracks the Nasdaq 100 with 3x leverage, down a massive 7.2%.
As the chart above from data provider VandaTrack shows, a tumble of that magnitude in 2021 would have prompted a wave of retail traders “buying the dip” in the ProShares ETF. But while small investors did indeed purchase about $48 million worth of TQQQ on Tuesday, that’s barely half the average that would have greeted a similar drop last year.
“This could be the first sign that retail fatigue or capitulation is setting in, at least in the tech space,” VandaTrack reckons.
As smaller investors tire of tech, they’re learning to love financial stocks – which stand to benefit as interest rates rise. Retail investors bought 2.5 times more financial stocks than average over the past five days, according to VandaTrack. As inflation booms and central banks start thinking about raising interest rates to tackle it, we may see more investors abandon exciting sectors in favor of the relative security of financial stocks.
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