Market Internal Insight
Retail & Foreigner Buying Above Seasonality – Driving Market Resilience
Key Highlights:
- Robust Retail Flow Across All Tracked Channels:
- Chart 1: UBS RMM recorded six consecutive days of buying since January 5, with exponentially time-weighted equity flow exceeding +0.2x for the first time since October 2025.
- Chart 2: Target Date Fund inflows reached +$21 billion within the first five days, significantly surpassing the $60 billion average Q1 trend.
- Chart 3: Equity ETF inflows totaled +$13 billion in the first five days, exceeding the $50 billion average Q1 trend.
- Chart 4: Strong foreign-listed US ETF inflow of +$4 billion in the first five days, well above the $15 billion average Q1 trend (Foreigner Proxy = x8 or $123 billion in Q1).
- Real Money Dominance:
- Charts 5–7: Historically, these real money flows have proven to be resilient drivers of sustainable rallies:
- From 2Q 2020 to 4Q 2021, markets rallied +84%.
- Since 4Q 2024, markets gained +60%.
- These flows are likely to support buy-the-dip behavior during news-driven weakness, barring significant external shocks, reinforcing market resilience.
Actionable Trade Ideas:
- Chart 8: Go Long IWM (Call & Call Spread Premium at 15-20th percentile vs. 5-Year Average):
- A dovish Fed is expected to support small-cap stocks and increase short-squeeze potential, with Russell 2000 short interest currently at the 97th percentile.
- Chart 9: Go Long QQQ (Call & Call Spread Premium at 20-30th percentile vs. 5-Year Average):
- Anticipated continued growth in AI trends through 2026 will remain a key driver for the economy and equity markets.
- Long KWEB:
- Positioned as a key AI growth beneficiary outside the US, particularly in China, with attractive valuations.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!