Another short squeeze, a new worst day for Growth vs Value (MSZZGRVL) after just setting that record a week ago, the 16th worst day for Momentum (MSZZMOMO), etc. and investors are asking "who's buying (and does it continue)" and "does the rotation have legs".  Evidence points to retail being a big contributor to both the recent equity rally and to the pro-cyclical rotation.  And both the rally and rotation likely continue over the medium-term – but that likely requires a handoff from retail to broader institutional sponsorship that could mean in the near-term there is some reversion.

The rational for a continuation of these moves is simple – HF and other institutions are still running light positioning, still heavily tilted towards Tech/Growth over Cyclicals/Value, and still concentrated in the same names (QDS's crowding metric is at all-time highs), meaning the pain trade is a cyclical driven rally.  But that move may not come all in a straight line and there are signs that retail demand is slowing, systematic strategies likely won't relever aggressively with volatility in the high 20% range, and discretionary institutional investors still appear relatively hesitant to chase.  QDS suggests investors hedge near-term downside risk with SPX July put spread collars, while using IWM November bullish risk reversals to position for medium-term upside and a cyclical rotation.