‘Unemotional demand’ followed by FOMO in store for US stocks this week, says Goldman
“Everyone is going back to the pool,” according to the bank’s tactical trading guru.
The V-shaped recovery in US stocks from their early August swoon will keep going strong, with new records for the S&P 500 this week.
That’s the view from Goldman Sachs’ trading desk, where managing director Scott Rubner highlights the buying power from trend-following funds and Corporate America’s appetite for its own shares as the catalysts for near-term gains.
“We estimate $17 billion of unemotional demand between robots and corporates every day this week during the most illiquid week of the year,” he writes. “$17 billion per day, enough to keep the bears away?”
CTAs – commodity trading advisors, or more colloquially known as trend following funds – sold aggressively during the market’s plunge in early August, per Rubner, as did other strategies that use volatility to determine their market exposure. Now, those funds have to make up for that by buying stocks and equity futures after the market’s snap-back.
Last week, Goldman’s buyback desk also saw its strongest demand of 2024, he added. A basket of companies flagged by the bank as buying back a significant amount of their own stock over the past year gained 1.9% last week, outperforming the S&P 500 by about 50 basis points.
This dispassionate demand may then lure in new, more excitable buyers.
“I think we make new highs this week,” he writes. “I think that FOMO [fear of missing out] will increase when the new all-time high headline hits.”
Rubner’s market timing instincts have been on point recently. In late June, he predicted the S&P 500 would peak on June 17th (it ultimately hit its record high a day earlier).
“I am bullish until September 16th,” he concludes, expecting a “tricky trading environment” after that before the S&P 500 advances to 6,000.
