The Iran conflict and $100 oil hasn't scared off the small investor — yet

Retail traders can’t stop buying stocks. Citadel Securities’ trading desk noted that its platform of small investors ended Thursday’s session as net buyers. This comes as the S & P 500 lost 1.5% in the previous session, while the Dow Jones Industrial Average ended the day down more than 700 points . Retail traders were also net buyers on Wednesday, Citadel Securities traders noted. The buying strength comes even as the U.S.-Iran war continues and crude prices hover around $100 per barrel . The Strait of Hormuz — a major shipping route of oil and other goods — is effectively closed, and President Donald Trump said in a Truth Social post that the U.S. has “unlimited ammunition, and plenty of time” to fight the war. “Despite the broader risk-off tone, retail continues to step in,” Citadel Securities wrote. This willingness to continue buying on dips has kept the market sell-off in check. The S & P 500 is still just 4.7% below its all-time intraday high of 7,002.28 reached Jan. 28. .SPX YTD bar SPX year to date “For now, sentiment remains resilient, expecting a short lived conflict,” wrote Barclays strategist Emmanuel Cau. However, it will be harder for retail traders to continue buying the dip if the situation in the Middle East drags on, Cau said. “If the closure of Strait of Hormuz gets prolonged and oil sustainably breaches $100/b, market confidence in a ‘Trump put’ may increasingly come under pressure.” Citadel Securities traders also pointed out that the magnitude at which retail investors are buying dips is “is notably lighter than what we observed in January and February.” On top of that, Goldman Sachs’ Tony Pasquariello warned it may be difficult for the stock market to break out of its range for the past five months. In that time, the S & P 500 hit a closing low of 6,538.76 and a high of 6,978.60. That’s a 6.7% range. The benchmark closed Thursday’s session at 6,672.62. “In that context, here’s a thought that I admit to having: in several months, maybe we’ll look back at this week and think 'the stock market was right, the US (and others) weren’t going to let the impingement go on for too long,” wrote Pasquariello. “Alternatively, maybe we’ll look back and think ‘there was a window where I still had time (and liquidity) to get risk off with S & P trading near the highs.’”