Castle Securities says that U.S. stocks have entered a seasonally weak February, and retail buying may show signs of weakness.

With the record-breaking buying frenzy that drove the upward momentum last month showing signs of fatigue, retail investors' enthusiasm for US stocks faces a major test. Castle Securities' data shows that the net inflow in January is more than 50% higher than the same period last year. Scott Rubner, head of stock and stock derivative strategies at the company, says that it is difficult to sustain such a large buying crowd of retail investors, especially in February when seasonal buying pressure in the stock market tends to be weaker. Castle Securities' data shows that since 2017, retail investors' activities have consistently cooled down as they transition from January to February. After reaching highs at the beginning of the year, net nominal fund inflows typically recede.