Retail traders stage biggest single-day stock dump since March 2020

Retail traders waved off their favorite habit Thursday. According to Vanda Research, individual investors dumped a net $338 million worth of single stocks — the largest one-day outflow since March 2020 for a crowd famous for buying every dip. What buying survived the session ran into leveraged products instead, namely the ProShares UltraPro QQQ (TQQQ) and the Direxion Daily Semiconductor Bull 3X Shares (SOXL).

The scale of the exit tracked the scale of the wreckage. The Dow Jones Industrial Average cratered 1,800 points, wiping out the entire post-midterm rally, while the Nasdaq Composite slid into a correction as money rotated hard out of technology.

Vanda didn't dress it up. In a note, the firm said the usual reflex was missing: on a typical sell-off, retail step in and buy the dip, and this time that bid 'effectively disappeared from individual names.' It called the session 'a rare buyers' strike colliding with forced selling.'

The same retail crowd spent much of 2020 and 2021 as a stabilizing force, pouring cash into beaten-down names and keeping markets from falling as far as they otherwise might. Thursday suggested that cushion can vanish, at least for a day — and it vanished on the very session that needed it most.

For now, the read from Vanda is that the money moving into triple-leveraged ETFs isn't the same thing as conviction. It's a bet on a bounce with borrowed horsepower, not a vote of confidence in any single company. CNBC's Nick Wells contributed to the report.