US retail investors retreated from equity markets in the first quarter, with their trading share dropping to just 17%—the lowest level in four years. However, JPMorgan Chase & Co. strategists see this pullback as temporary, projecting a second-quarter recovery that mirrors the pattern from last year.

The strategists, led by Nikolaos Panigirtzoglou, point to options market data as evidence. Small traders scaled back call option purchases between October 2025 and March 2026, but activity surged again in April and May. This shift suggests retail investors are re-entering riskier trades.

Retail money carries weight because individual investors typically chase momentum and popular names, driving short-term volatility that can lift broader indexes. When retail flows return, they often coincide with renewed buying in tech and growth stocks that dominate market-cap-weighted indices.

The timing matters for portfolio managers. If retail participation climbs back toward historical averages, it could provide the liquidity boost that markets need after months of institutional-dominated trading. This seasonal pattern may prove more reliable than any fundamental catalyst.