Return of the retail trader

After watching a 22-month stock rally, the E*Trade crowd rejoins the market.

Steve Gomez / Today Trader / The Reformed Broker
This chart shows the activity of E*Trade Financial ($ETFC) over the past three months. Have the 'retail traders' finally decided they want to rejoin the stock market?

The anecdotes and empirical evidence are sloshing in over the transom. No one should be surprised to see the lunch-break traders and retail commandos coming back after a 22-month, almost uninterrupted stock rally.

Now, notice the difference between when I talk about retail investors and retail traders. They are closely related and there is definitely some overlap - but they are not quite the same animal.

The retail investors' activities can be tracked more effectively by fund flow data, the filings of public asset managers like T Rowe and Janus, along with sentiment polling.

The retail trader, on the other hand, can be tracked thusly...

This chart of E*Trade Financial ($ETFC) was uploaded to by my San Diego pal Steve Gomez of Today Trader.

Away from the stock price, the single best way to measure E*Trade's core trading commission business is with their monthly DARTs reports. Daily Average Revenue Trades for E*Trade's November report came out on December 15th. They were up a whopping 9% sequentially over October.

Something tells me that December's number will show strength as well, lending support to Today Trader's hunch that the retail trader has, in fact, been making quite a comeback.

BTW, the irony that this is coalescing in the midst of a cooling off for the market over the last week is not lost on me and is probably just absolutely delicious to the pro trader market snobs.

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