MW These whales are almost finished loading up on U.S. stocks, so it's time to start reducing risk, says former trader.

By Barbara Kollmeyer

Kevin Muir sees massive 'vol control' funds nearing the end of a buying spree

The V-shaped bounce stocks have seen this year has both elated and scared some investors. Is it too much, too fast, or a case of stocks will keep grinding higher?

On the increasingly wary side is Macro Tourist blog author and former institutional trader Kevin Muir, who in our call of the day, explains why signals from influential whale-like strategies are turning him more bearish on the S&P 500.

"I have been sitting on my hands patiently waiting, and yesterday was the first day that I kind of went back out and said, 'Okay, it's time to take a step back, let me back up just a little bit,'" Muir told MarketWatch in a Wednesday interview.

He's a regular tracker of volatility control funds - "vol control" - or strategies used increasingly by big institutions such as pensions and longer-term endowment funds to keep risk on an even keel. They give up extra potential gains in order to keep volatility at bay.

"During periods when the stock market is calm, they increase their exposure. When the environment switches to a more volatile period, they decrease their investment in stocks," Muir explained in a post from 2023. (Also check out the Macro Manv substack.)

"This is the sort of under-the-radar strategy that gets little attention, but where big money is allocated on an institutional level," he said.

Muir believes the stock-market rally in the past two months was driven by those funds, which were forced into selling in the Liberation Day aftermath as volatility surged. A fairly volatile bounce higher for stocks following that meant those strategies have only slowly been repositioning in markets.

"I've been aware that there was still a lot of buying left to be done, and so I was waiting for them to complete their buying, and although there's still some buying to be done, we are getting closer to the end," he said.

After watching these strategies and how they affect markets, he's "convinced that they are part of the puzzle of understanding what's happening out there," he said.

"Ultimately, they have been pushing the market up like on a day when there's no news and everyone's confused about why the market is just drifting higher. To me, it's explained partly by the vol-control funds continuing to just be there buying every single day," said Muir.

Muir said he tracks those whales via Standard & Poor's, and compiled this chart to illustrate activity over the past year:

He estimates those strategies total between $300 billion and $500 billion in assets, big enough to make them influential whale-like investors.

And while the vol-control funds have been tiptoeing back into stocks, "retail just stood in there and bought and bought and bought," in an amount that both amazes and worries him.

"And to me, this just feels like although retail has indeed won over the last couple of months, it really feels to me like they're buying the most at the top and that this is very reminiscent of 1999 to me or even the peak insanity in 2021," said Muir.

His advice? Longer-term investors should start thinking about reducing risk to U.S. stocks and diversifying elsewhere. He's worried tariff fallout could work the opposite to that stimulus and weigh on stocks. In addition, history has shown - such as in 1929 and 2000 - that putting money into a heavily concentrated market like the current one, hasn't worked out so great for investors.

Muir said ultimately, he's a bear on U.S. stocks - "the most expensive, over-owned, most concentrated asset out there with a government that has introduced unprecedented economic volatility" - and picks points where he doesn't want to fight the tide. "With the vol-control funds buying, and with seasonals so strong, I have avoided fighting the rally. I just think the time is back to be willing to fade the strength again," he said.

The markets

U.S. stock futures (ES00) (NQ00) are slightly higher, though Dow industrials futures (YM00) are flat, as Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y BX:TMUBMUSD30Y continue to rise. Bonds were rattled Wednesday over speculation about Fed Chair Jerome Powell's tenure.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              6263.7     0.01%   4.73%   6.50%   12.09% 
   Nasdaq Composite                                                     20,730.49  0.58%   6.06%   7.35%   15.19% 
   10-year Treasury                                                     4.477      12.60   8.10    -9.90   27.20 
   Gold                                                                 3348.8     0.79%   -1.11%  26.88%  35.96% 
   Oil                                                                  66.73      -2.28%  -8.73%  -7.15%  -19.70% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

More earnings are rolling in - PepsiCo $(PEP)$ reported surprisingly strong revenue, as United Airlines (UAL) refined its 2025 outlook.

Taiwan Semiconductor Manufacturing (TSM), contract manufacturer for Nvidia and Apple, posted a jump in profit and better full-year sales guidance. Shares are up.

After the close, Netflix (NFLX) earnings are due.

Sarepta Therapeutics (SRPT) is up over 30% after the gene-therapy company announced a restructuring and layoffs aimed at saving $400 million a year.

Weekly jobless claims and retail sales for June - a 0.2% rise is expected after a 0.9% drop in May - are set for release, as import prices and the Philadelphia Fed manufacturing survey also are due at 8:30 a.m.

New York Fed President John Williams said President Donald Trump's higher tariffs have started to pressure inflation, which will likely increase in coming months.

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The chart

Scott Rubner, Citadel Securities' new head of equity and equity derivatives strategy, expects "robust" retail trading flows through summer, notably in June and July, before dropping off in September. "Retail traders have deployed their largest amount of capital in July over the last two years and 2025 is no different," he told clients in a note.

Top tickers

These were the most active tickers on MarketWatch as of 6 a.m.:

   NVDA  Nvidia 
   TSLA  Tesla 
   TSM   Taiwan Semiconductor Manufacturing 
   GME   GameStop 
   AMD   Advanced Micro Devices 
   OPEN  Opendoor Technologies 
   PLTR  Palantir Technologies 
   PLUS  EPlus 
   AAPL  Apple 
   NIO   NIO 
   RKLB  Rocket Lab 

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-Barbara Kollmeyer

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July 17, 2025 06:50 ET (10:50 GMT)

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