JPMorgan strategists led by Nikolaos Panigirtzoglou warned in an Aug. 7 report that the buying structure for technology stocks could become more fragile. If hedge fund demand fades, tech equities will increasingly rely on retail investors, leveraged ETFs, options trading and margin accounts. Such flows can amplify gains during rallies but add to drawdown pressure when volatility spikes. The note also said prime brokers may impose tighter limits on high-volatility tech positions, slowing the pace at which institutions can rebuild leverage.
JPMorgan strategists led by Nikolaos Panigirtzoglou published a research note on Aug. 7 warning that the buying structure of technology stocks could turn fragile. The team said that if hedge fund buying retreats, tech equities will become more dependent on retail investors, leveraged ETFs, options trading and margin accounts.
These capital sources can magnify an uptrend, but they also deepen pullbacks when volatility rises. In addition, prime brokers are likely to apply stricter limits on highly volatile tech positions, which would slow the speed at which institutions can rebuild leverage.
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