🎁Can the market revisit July's peak? Insights from Goldman Sachs & CBOE
The three major indexes $S&P 500(.SPX)$ $NASDAQ(.IXIC)$ $DJIA(.DJI)$ have rebounded continuously from their lows last Monday. Can we still see stock indexes rise more than in July in the short term?
1. Goldman Sachs Advises: Buy U.S. Stocks on Dip in Late August
Scott Rubner of Goldman Sachs Global Markets suggests that investors should capitalize on the opportunity to buy U.S. stocks on dips at the end of August. He anticipates ongoing selling pressure for the next week but has seen signs indicating the market's technical low is over. Rubner plans to shift to tactically bullish stocks on August 30, following his recommendation in June to reduce U.S. stock exposure after July 4.
Goldman Sachs notes that 90% of $S&P 500(.SPX)$ companies are in an open buyback window, which is set to close on September 6, allowing for up to $4.75 billion daily in potential buybacks.
However, Rubner cautions that the market outlook may worsen in September, with the second half typically the worst for stocks. According to him, a clear upward trend is not expected until Q4 and after the November U.S. election.
2. CBOE Outlook: U.S. Stocks Face Continued Volatility
CBOE suggests that U.S. stocks are likely to see ongoing volatility in the next few months, following last week's market fluctuations. Although the initial panic has calmed, historical trends show that markets often remain unsettled for an extended period after a sharp decline, as indicated by the $Cboe Volatility Index(VIX)$ index's surge.
Mandy Xu from CBOE Global Markets has observed that the swift market movements reflect risk liquidation from position adjustments. Meanwhile, JJ Kinahan of IG North America and Tastytrade warns that it typically takes six to nine months for the $Cboe Volatility Index(VIX)$ to stabilize, during which time the market can still deliver surprises.
The stock market's climb to record highs in early July was disrupted by disappointing tech company earnings, causing a sell-off and a rise in the $Cboe Volatility Index(VIX)$ from its low base. The situation worsened in late July and early August with the Bank of Japan's unexpected interest rate hike, which impacted carry trade investors.
Given the insights from Goldman Sachs and CBOE regarding the current state of U.S. stock indexes, here are some questions for Tigers:
How might the open buyback window for 90% of $S&P 500(.SPX)$ companies influence short-term stock prices?
With CBOE's outlook pointing to continued volatility, what factors may be inclueded?
Rubner suggests that a clear upward trend may not be seen until Q4 and after the November U.S. election. Will this affect your long-term portfolio strategy?
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How might the open buyback window for 90% of $S&P 500(.SPX)$ companies influence short-term stock prices?
With CBOE's outlook pointing to continued volatility, what factors may be inclueded?
Rubner suggests that a clear upward trend may not be seen until Q4 and after the November U.S. election. Will this affect your long-term portfolio strategy?
Join to share your understanding and win Tiger Coins
The market will not go up straight too. it should hit some resistance, and be choppy.
By year end, it should be all time highs!
The open buyback window for 90% of S&P 500 companies can influence short-term stock prices by increasing demand for shares. Companies repurchasing their stock can reduce supply, potentially driving prices higher. However, short-term volatility, as indicated by the CBOE, means other factors will also play a role.
Key elements affecting short-term stock prices include market sentiment, economic indicators (such as inflation and unemployment data), interest rates, and overall market liquidity. These factors can either amplify or dampen the effects of buybacks on stock prices.
Rubner's expectation that a clear upward trend might not emerge until Q4 or after the November U.S. election suggests a cautious approach. In this context, consider maintaining a diversified portfolio to manage risk and focusing on resilient sectors. Staying informed about political and economic developments will help guide your long-term investment strategy. Adjustments may be necessary based on market conditions, but a well-considered approach can help navigate periods of uncertainty.
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