Posted by on June 27, 2017 3:25 pm
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Categories: bank of america Bond Business Economy Exchange-traded fund Finance Fund Flows Hedge fund Investment money Real estate S&P 500 Technology

As tech stocks continue to hit new all time highs, the general assumption is that they are being, well, bought by the broader population even if non-growth stocks remain largely shunned. Well, at least according to Bank of America that is not happening. And it’s not just tech stocks.

In the latest client flow report from BofA’ Jill Hall, we learn that last week, during which the S&P 500 climbed 0.2%, BofAML clients were net sellers of single stocks for the third consecutive week, although the number was almost offset by net buying of ETFs. Institutional clients were the biggest sellers and have now sold stocks the last two weeks, while private clients were also sellers following two weeks of buying. Hedge funds were net buyers for the second consecutive week. Clients bought mid caps for the third week in a row, and sold both large and small caps. Buybacks by corporate clients slowed ahead of quarter-end, and continue to track below typical June levels.

As for Tech, it appears thatit goes up the more traders sellit:

  • While hedge funds were buyers of Tech stocks for the second week, institutional and private clients continued to sell Tech stocks for the third and fifth consecutive week, respectively. Quarter-end rebalancing may pose risk to Tech, where mutual funds carry their biggest overweight positioning in our post-2008 data history.
  • Energy and Staples stocks saw net selling by institutional clients, hedge funds and private clients alike last week. No sector saw net buying by all three groups.
  • Pension fund clients were net buyers of US equities for the fourth week, chiefly due to ETFs. Single stock buying was mostly in defensive sectors, while the group’s biggest net sales were in Tech and Energy stocks. See Pension fund flows for deta

Some other details:

Clients’ biggest net sales last week were in both defensive sectors (Staples, Health Care) and cyclical sectors (Discretionary, Energy and Tech). Only stocks in the bond proxy sectors of Telecom, Utilities and Real Estate – along with the Industrials sector—saw net buying, as interest rates continued to tick downward. Staples—where fundamentals remain challenged—continues to see the longest net buying trend at 11 consecutive weeks, but flow sentiment remains most persistently negative within Health Care, where four-week average flows have been negative since March’16. Telecom has seen four straight weeks of net buying and is the only sector which has seen cumulative net buying year-to-date.

Institutional clients were the biggest net sellers, while private clients were also net sellers vs. hedge funds who were buyers. Corporate buybacks continued to slow and remain  below typical June levels. Large and small caps saw net sales while clients bought mid caps.

Finally, here is the rolling four-week average trends by sector

  • Net buying: ETFs since early Oct 2016; Industrials since mid-April 2017; Telecom since mid June 2017.
  • Net selling: Health Care since mid-March 2016; Consumer Discretionary since mid- Jan 2017; Tech since early March 2017; Staples since early April 2017; Materials since early May 2017; Telecom since late May 2017; Real Estate (not shown; data since Sept. 2016) since mid June 2017; Financials since mid-June 2017.
  • Notable changes in trends: Energy is now back to seeing net selling after a brief period of buying; Utilities is now seeing net buying after sales since early May ‘17.

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