The selling streak continued last week as investors unloaded pretty much everything. The S&P 500 managed a measly 0.2% increase last week, and with all the selling that seems to have been going on, it’s a surprise the index didn’t get killed.

Q3 fizzles out

Bank of America Merrill Lynch strategists Jill Carey Hall and Savita Subramanian report that their firm’s clients were net sellers of U.S. stocks, unloading $1.9 billion worth of them for the 13th consecutive week as the third quarter fizzled to a close. They report that last week marked the largest weekly net sale in three months as all three client types (institutional investors, private clients and hedge funds) unloaded assets. Institutional investors continued to be the biggest sellers, they add.

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The sales came in large- and mid-caps, although BAML clients bought small-caps last week.

Broad-based selling across sectors

The BAML team said sales among their firm’s clients spanned the sectors of the S&P 500, with Telecom being the only sector that recorded inflows. The biggest net sales came in the Technology and Health Care sectors, although Consumer Discretionary still holds the longest selling streak of late. BAML clients have been unloading Discretionary stocks for the last 14 weeks in a row. Hall and Subramanian believe there’s still gas left in the tank where this selling streak is concerned as despite all the sales, Discretionary is still the most crowded sector among mutual funds.

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Although no sector in the S&P 500 has a long-term net buying streak, Telecom stocks have racked up inflows in 11 of the last 12 weeks. Looking at four-week averages, the BAML team said Financials has the greatest outflows, which is probably due to the recent negative headlines for banks.

Real Estate stocks picking up steam

The strategists added that while cyclicals were favored over defensives during the third quarter, the flows of their firm’s clients were skewed toward the defensive end. In addition to exchange-traded funds, only the Telecom sector saw inflows. The one exception among the trends was Health Care, which had the greatest net sales.

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Private clients, hedge funds and institutional investors all unloaded Tech and Energy stocks. Institutional clients were broad-based sellers in all sectors last week and on a four-week average but were buyers of Real Estate stocks. The BAML team has been expecting mutual funds to pick up Real Estate stocks both before and after the breakout of the sector in the S&P 500 because they were underexposed to it.

Corporate buybacks picked up slightly from the week before when they were at their lowest level in nine months, although buybacks for the full third quarter were the smallest of any third quarter since 2010.

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