Individual investors are selling stocks at the fastest rate since the COVID-19 pandemic began, according to Vanda Research. Tuesday marked the largest net selling day for individual investors in single stocks since the early days of the pandemic.

Rather than buying dips, this retail cohort is adopting a more cautious strategy. Selling activity was concentrated in memory stocks, including Micron Technology, Sandisk, Seagate Technology Holdings, and Western Digital, which accounted for $213 million in net sales on Tuesday. This year, individual investors have sold single stocks on nine separate days, a notable shift from previous years.

Despite selling individual stocks, investors are not exiting the equities market entirely. Instead, they are increasingly favoring diversified Exchange Traded Funds (ETFs) for a "defensive alternative." This trend indicates a behavioral shift towards reducing single-name risk and a preference for broader market exposure, potentially leaving popular momentum stocks vulnerable.