High flows from long-time managers; Hedge fund sell-off accelerates: Read By Investing.com

Long-time managers have continued their buying activity over the past week, Citi strategists said in a note on Tuesday.

Last week, the Wall Street firm pointed out that long-time managers had resumed buying for the first time in seven weeks, initially focusing on defensive sectors. However, last week saw a notable turnaround, with Tech stocks also attracting strong inflows.

In addition, long-time managers also added positions in Financials, Consumer Discretionary, Health Care and Industrials, while reducing exposure to Utilities, Consumer Staples and Communications.

Hedge funds, on the other hand, were net sellers in almost all sectors, with the most notable net outflows coming from Technology, Financials, Materials and Energy.

“The only sector net bought by hedge funds last week was Communications,” Citi strategists noted.

They also pointed out last week that the Stagflation and Goldilocks correlations, where Tech is the dominant sector, appeared to be bottoming out, recalling the decline seen in the second half of April earlier this year. This trend appears to be developing as anticipated, with both correlations rising this week as the “Overheating” trading theme has waned.

Moreover, “Early Recession” correlations rose with the defensive sector positioning seen in recent weeks, while “Late Recession” correlations, which typically capture trades in recession after the worst has passed, also saw an increase.

US stocks closed slightly lower on Tuesday, ending their recent rally, as the market awaited the upcoming Jackson Hole Economic Symposium, which starts on Thursday.

All three major U.S. indexes, , ( DJIA ) and , ended a multi-session rally that saw the stock market recover from a sharp decline triggered by recession fears.