JUL · ISSUE 31 · July 28, 2026
REGIME CHANGEThe 'buy the dip' era is over
The cushion that propped up six years of stocks has run out.
DIP-BUYING
lowest
since before COVID
HEDGE FUNDS IN JULY
-4.5%
2nd-worst month since 2023
FEAR & GREED
40
fear, not capitulation
THE NUMBER
6 years
↓ the reflex to buy every dip breaks for the first time
The indicator tracking retail dip-buying is at its lowest since before the pandemic. The small investor, who absorbed every drop since 2020, has run out of patience.
DATA
ZOOM INThe 6-year cushion
-4.5%
▼ hedge funds in July · 2nd-worst month since 2023
It isn't just the small investor: professional money is cutting exposure too. When both retreat at once, the floor disappears.
Since 2020, retail bought every dip and put a floor under stocks. That silent support is exactly what just disappeared.
- EXPOSURE
- — How much money an investor actually has invested and at risk.
- FLOOR
- — A price level where enough buyers appear to stop the fall.
QUOTE
AUTHORITYThe cushion is gone
“Retail has stopped buying the dips. The six-year cushion is gone, and now it's selling the rallies too.”
Retail was the buyer of last resort for six years. BoFA's own indicator says that safety net is no longer there.
- BUYER OF LAST RESORT
- — The one who keeps buying when everyone else is selling.
- REGIME
- — A market behavior pattern that lasts years until it breaks.
TREND
THE CUSHIONThe safety net is deflating
Six years of unconditional buyers, evaporating right before the busiest week of the summer.
Retail appetite to buy the dips. It stayed high from 2021 and is now sliding to pre-pandemic lows.
- APPETITE
- — An investor's willingness to take risk and buy.
- PRE-COVID
- — The period before March 2020, a benchmark for a 'normal' market.
BEFORE AND AFTER
TWO REGIMESThe shift that redefines the floor
2020-2025 REGIME
The automatic reflex
- Every dip was an opportunity: retail bought without hesitation.
- Volatility faded fast; scares lasted hours.
- There was an invisible floor under every correction.
2026 REGIME
The net withdraws
- Retail no longer buys the dip, and it sells the rally too.
- Hedge funds are cutting exposure: -4.5% in July.
- With no buyer of last resort, drops can last longer.
The same market behaves in opposite ways depending on who's behind the dips. This is what has changed.
- VOLATILITY
- — How much and how fast prices move; the market's 'nervousness'.
- CORRECTION
- — A drop of 10% or more from a recent high.
POSITIONING
WHO HOLDS IT UPWho props up stocks now
Companies repurchasing their own shares
Automatic contributions into index funds
The buyer that's tiring out
Lowering exposure: -4.5% in July
When two of the four pillars retreat at once, the market leans on buyers who don't choose: they buy because they have to.
If retail steps back, the load falls on more mechanical buyers. Illustrative split of who's putting up the money today.
- BUYBACK
- — When a company buys its own shares and shrinks the count outstanding.
- PASSIVE FLOW
- — Money entering index funds that buys without weighing price.
WATCHLIST
6 TO WATCHSix signs the floor is giving way
| SPY | ~739 | → +0.1% | The broad market. Flat: the missing buyers show up as a missing bounce. |
| RSP | ~184 | ▼ -0.2% | Equal-weight S&P. Shows health without the megacaps: weaker than the index. |
| IWM | ~228 | ▼ -0.5% | Small caps, the gauge of retail appetite. The first to feel it. |
| HYG | ~78 | ▼ -0.3% | High-yield bonds. If fear grows, money flees here first. |
| VIXY | ~24 | ▲ +1.2% | A bet on more volatility. Rises when the market stops being calm. |
| BIL | ~100 | → +0.01% | 3-month Treasury bills. The refuge for money stepping out of risk. |
These six tell you whether the market still finds buyers, or whether the semis scare turns into something bigger.
- EQUAL-WEIGHT
- — An index where every company counts the same, regardless of size.
- SMALL CAP
- — A small-capitalization company; more sensitive to retail mood.
- T-BILLS
- — Short-term Treasury debt, the safest and most liquid asset.
OUTRO
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- RETAIL
- — The small individual investor.
- FLOOR
- — A level where enough buyers appear to stop the fall.