Reverse RobinHood

The HOOD chart tells you how retail traders are doing. HOOD has attracted mostly millennial retail traders who caught the investing bug during Covid and have been addicted ever since.  They post on Reddit wallstreetbets and Stocktwits. Their top holdings are NVDA, TSLA, PLTR, bitcoin and ether, and an assortment of pumped up but now deflating speculative tech stocks in one of the following sectors: AI adjacent play (energy, nuclear, data center), space, quantum, and semiconductors.   When retail traders are doing well, their account balances go up, they trade more, and HOOD makes more money from payment from order flow.  When retail traders are doing poorly, their account balances go down, they trade less (size), and HOOD makes less money from payment from order flow.  No, Robinhood is not there to take from the rich and give to the poor.  They are the reverse Robin Hood.  They take from the poor and give to the rich.  Robinhood has gone a long way to enriching those at the HFT firms Citadel, Susquahanna, Virtu, Wolverine, etc.  

Robinhood investors had a very difficult Q4 in 2025, losing 24.6%, even though the SPX was up over 2% on the quarter.  And so far in 2026, the losses continue, even as the SPX remains in a tight range, flat on the year, while Robinhood traders have lost an estimated $4-5 billion in January.  

The pain is real, as you can see HOOD stock take it on the chin ever since their clients started losing boatloads of money since the October 2025 top.  Based on the HOOD chart, I think Jim Chanos's estimate of Hood customer losses in January are low.  

The trading performance of Robinhood customers may seem irrelevant to the overall market, but it reveals a lot about the financial situation of retail investors.  Since stocks are now a large portion of their net worth, investor psychology plays a big part in their trading.  The bigger the position, the bigger the emotion.  While retail investors were motivated by greed due to their strong performance from January 2023 to October 2025, things are changing now.  Previously, big Hood retail investor down swings were a result of a weak SPX/NDX.  But over the past 4 months, the SPX/NDX are barely down, but retail investors are getting pummelled in this market.  It is a game changer.  The sharks are smelling blood and going after them.  

They are in all the wrong stocks and assets.  They are loaded up on crypto and stocks like PLTR, OKLO, IREN, RGTI, IONQ, ASTS, HIMS, etc.  To make matters worse, Hood traders follow the herd, chase moves, and usually buy the most near tops.  All of their favorite holdings are down big from their 52 week highs.  Hence, they are in big drawdowns, even at SPX 6830.  

Fear is now a factor.  Investors don't make many mistakes when they are making a lot of money.  They make a lot of mistakes when they are losing a lot of money.  Fear is a stronger emotion than greed.  I would be on the lookout for lots of fear based trading from retail traders in the coming 12 months, mainly because of the Wall St. greed machine.  When Wall St. sees an opportunity to dump lots of supply at high prices to the public, they will.  

Later this year, those retail investors will be flooded with tons of supply in the speculative tech sector.  We are going to be getting huge IPOs in 2026 from Space X ($1.5 trillion estimate), Anthropic ($500 billion estimate), and Open AI ($1 trillion estimate).  Add to that  a bunch of chunky sized AI related IPOs coming from the private markets.  Private equity is looking to cash out and get liquid as they are having a tough time selling their bags in an oversaturated and overpriced private asset world.  Elon Musk is many things, good and bad, but one thing he is exceptional at is playing the market.  Space X buying up xAI and then IPOing as quickly as possible at the final stage of this bull market will end up being a boss move.  

I am seeing more bearish calls from traders on Twitter.  Just a month ago, they were quite bullish, and very complacent.  But ever since the Greenland fiasco, investor confidence has been getting worse.  Now the focus is on what stocks get hurt by AI, rather than what stocks benefit from AI.  The options market is acting like the SPX is down 10%, not 2%.  You are seeing similar put/call ratios as in mid November, when the SPX went down 400 points from the highs to the lows. 

Whenever you see this much put buying on just a small dip, it usually means that you won't be getting a bigger dip.  All the put buying means that investors are well hedged for more downside, making the downside less likely to come.  

Even while they are buying puts, they also keep piling into the market like mindless robots.  Retail equity inflows according to JP Morgan are coming in hot and heavy.  Those that say that this is the most hated bull market of all time (quite a few that say this) are talking nonsense with no data to back it up.  It looks more like the most loved bull market of all time.  

The ETF inflows are now going from mostly tech, to non-tech.  You are seeing the highest sector inflows into non-tech stocks over the past 15 years, at +3.7 std. deviations above the norm.  

While retail traders keep getting pummelled as they continue to pour their money into the market, I wouldn't bet against them continuing to pour more funds into this market.  Tax refunds will be much bigger this year, and tax refund season peaks from mid February to late March.  That also happens to be when the most equity inflows occur.  

Shorts will be fighting an uphill battle with all the tax refunds coming down the pike.  These inflows should last into April, where they will peter out, which could coincide with the final top for the SPX.  The liquidity is on the bull's side for the next several weeks.  The main reason I would rather be a buyer of dips than a seller of rips.  Long term, I agree with the bears that Nasdaq weakness will eventually lead the market lower, as the AI hype wears out and the hype doesn't match earnings potential.  Along with increased tech supply via jumbo sized IPOs and lockup expirations coming later this year and in 2027.  But short term, the elevated put/call ratios and fiscal pump are bullish factors.  

Nothing notable for the equity indices in the COT data released last Friday.  For precious metals, you continue to see de-risking from speculators, and open interest dropping, which usually means a range bound market and reduced volatility going forward.  No strong opinion on the metals here, they are acting stronger than expected after the blowoff top.  The Chinese New Year will keep the most aggressive buyers of the metals on the sidelines for the next week, so it will be interesting to see how gold and silver hold up during this period.  I fully expect the Chinese to come roaring back with aggressive buys after their long holiday, so I wouldn't short gold here.  Historically, gold and silver are quite strong for the month after Chinese New Year.  

Will be looking to buy the dip in SPX this week. SPX 6800 seems to be a durable support zone, and I will be looking to buy around the 6750-6800 zone.  Bottom line, short term bullish, long term bearish.