As central banks push up the rates and reduce the liquidity. the most favourite club, their retail traders are not to be seen anywhere on any news reports or screens. They were dominating both till December 2021.
The favourite stocks of the club are already down by 50-60% from the top with very thin liquidity for a smooth exit. The total margin debt in USA equity markets has come down to $770 Bn from $900 in November 2021. This was the main source of funds for the club that has shown a drastic fall.
Some brokerage reports also indicate that last quarter was the first when the club reported a loss. This would impact its ability to buy on dips in the near term. The reduction of participation also impacts the liquidity in single-stock options, as it was another favourite trade category. This makes sure that volatility remains high in the near term with large swings on either side.
The majority of the club is new members that have joined in during the easing policy phase and are not experienced such reversal with high volatility. This will put a high uncertainty of how many will survive by the time central banks are finished with what have they started.
Keep a watch on VIX as this phase will end up with the breakout of the volatility led by a crisis or official recession that on average starts post seven months of markets peaking out. As they say on a rollercoaster, hold on tight it will get wild before getting mild.