After correctly predicting the decline in the U.S. stock market in April, Goldman Sachs jumped back to the bullish point.
In a report last Friday, Goldman Sachs trader Scott Rubner believes that the worst moment has passed and the late April lows may be "temporarily" the bottom.
He pointed out that the massive rise in U.S. stocks on last Thursday was a proof of the market's extremely negative sentiment and low position . As the ban on U.S. listed companies (from two weeks before the end of the quarter to 48 hours after the announcement) is about to end, capital flows will improve from Monday, and global stock markets will rebound sharply in May :
"The fluctuates and widespread trading continues, but the market's technical reversal in May, which is beneficial to the bulls."
In addition to this, Goldman Sachs also listed a series of reasons in the report to prove its views.
ban period ends
Goldman Sachs believes that with the end of the ban period of listed companies, repurchasing stocks will once again bring impetus to the market.
American companies are the largest stock buyers in the US stock market in 2022. Currently, the repurchase plans approved by the board of directors of various companies have set records ( Apple will repurchase $90 billion, Google will repurchase $70 billion, Microsoft will repurchase $60 billion, etc.).
Goldman Sachs estimates that by mid-June, there will be $5 billion in corporate repurchase demand every day in the U.S. market.
Although the U.S. Securities Commission (SEC) does not expressly prohibit company executives from buying or selling stocks on the eve of the release of the performance report, in order to avoid the suspicion of insider trading of employees, the management regulations of most listed companies in the United States will be stipulated in this way.
funds flow out to a new high, and market sentiment hit a new low, and
In the report, Goldman Sachs believes that both the current market funds and sentiment have reached a low point, and the market bottom has appeared.
Over the past week, stocks, bonds and cash have all experienced outflows. U.S. stock funds recorded the largest outflow in 2022, while large-cap stock funds recorded the largest outflow since 2018.
Meanwhile, Goldman Sachs' sentiment indicator (SI) is currently -2.2, usually as a solid reverse indicator for the market. Of the 687 weeks since the record, only 14 records were below this number.
bullish investor AAIIBULL index also fell to its ninth lowest since 1987.
Goldman Sachs pointed out that after these extremely negative readings historically, market returns have turned bullish, and the accuracy rate after 6 months was 100% (all 14 times correct), with a median of 19%.
put options hit a record high futures position hit a record low
Last Friday, the scale of retail investors purchasing single-day maturity put options hit a record high. $225 billion of put options and $160 billion of nominal call options were purchased respectively. opened in the first hour of trading volume reached US$105 billion.
is in sharp contrast to the rising put options, and the current futures position has only ranked 15th percentile in the past 10 years. For reference, the highest futures position in 2022 is +138.4 billion USD (January 25), and currently it is +10 billion USD.
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