Yes, Retail Investors Are Spooked, And So Is DC

Today we want to provide an update on what Google search trends are telling us about retail investor sentiment. We’ve been tracking the data daily since this investor cohort finally started to push capital into US stocks last month. Now, with the market in melt-down mode, the question becomes “Will retail change course?”

We’ve included the 7-day Google Trend data for the term “stock market” below, and it tells a clear story:

• US searches for “stock market” reached a new high today – not just for the week, but for the prior year as well. The old YTD high was February 2nd, but today’s search interest was 3x higher.

• This means we have to watch the open tomorrow very carefully, because the interest that Google is measuring is fear, not simple interest in some pop culture icon. Peak interest came at 4:04 pm East Coast time – a sure sign that retail investors took note of the intraday market action. We have a raft of data that shows retail does tend to trade the open, as the old market cliché says. What they decide to do before 930 am could determine if we break to a new low, or hold at today’s closing levels.

• Worth noting: zoom into the Google Trend analysis for just today, and you’ll see that Washington DC was the epicenter of incremental searches for “stock market” over the day. New York and California – two states with large concentrations of investors – were #3 and #4.

Make no mistake: retail investors were a major reason stocks made all time highs in January, and they will be a piece of any further selloff. As for the unusually high levels of attention in DC over the market swoon, only time will tell if those searches came from the new occupant of the big office at the Federal Reserve, or elsewhere.