Institutions Becoming More Cautious?

Every week, the Bank Of America Merrill Lynch equity strategy team breaks out data on how much clients are buying and selling.  The report looks at the average of a 4-week time frame.  Over the last few months, the big institutional clients at the bank have been rotating out of stocks on a consistent basis, while the average investor seems to continue to like to buy into the market.

According to this week's data, the amount of selling by institutional clients over the past four weeks has hit the highest level on record.  "Net weekly sales by this group were the largest since March, and the sixth-largest in our data history (since 2008)," writes BAML strategist Savita Subramanian in a note. "And on a four-week week average basis, outflows by institutional clients are the largest in our data history."

While this is only one piece of market data and should be taken in context, it's important to pay attention to what institutions are doing.  While markets can always continue to move higher, it's usually wise to be aware of the actions of institutions, especially when retails investors are doing the exact opposite.