Goldman Sachs has issued a warning that the S&P 500 index is about to undergo an adjustment and advises investors not to buy low. In a report to customers, Goldman Sachs analysts identified multiple indicators that the market is about to fall.
According to the Finance and Economics App, Goldman Sachs has issued a warning that the S&P 500 index is about to adjust, and advises investors not to buy low. In a report to customers, Goldman Sachs analysts identified multiple indicators that the market is about to fall.
Goldman Sachs strategists have indicated that there is only a possibility of a decline in the S&P 500 index at its current level. He warns, "I won't buy low." The global head of the Goldman Sachs Market Division, citing data from as far back as 1928, said,
Wednesday, July 17, typically marks the end of the bull market cycle in the S&P 500 index, which historically marks a turning point in stock market returns. August is usually the month when money flows most heavily out of passive stocks and mutual funds.
In addition, Goldman Sachs noted that the S&P 500 index hit 38 historical highs this year, making it the second strongest year in nearly a century, second only to 1995. "The market has no upside, I won't buy low," the analyst emphasized.
The report suggests that the expiration of July options could lead to increased market volatility as current traders' long gamma positions are being closed out. As the holiday begins, trading liquidity is expected to decrease and the market may see more pronounced volatility.
Analysts noted that passive capital inflows have slowed significantly, with $8 billion in selling showing market imbalances at the close of the past three days.
Goldman Sachs further explained that August is usually the month of the largest outflows of stock funds. They noted that the top five ranked stocks in the S&P 500 index contributed to 41% of its gains and these companies face high expectations in the upcoming earnings season.
"If you invest $1 in the S&P 500 ETF SPY, 29 cents will flow into the top five stocks, a new record," the report said.
Goldman Sachs analysts also emphasized the dynamic changes in the market, with small-cap stocks outperforming giant tech stocks in recent weeks, but warning that this rotation has not led to broader market declines. They remain cautious about the sustainability of this trend and advise investors to be vigilant.
On Wednesday, the Nasdaq 100 index fell 2.94%, marking the biggest one-day drop since December 2022, with all seven weighting companies falling, led by Nvidia (NVDA.US) with a decline of over 6.6%, and Apple (AAPL.US) dropping 2.5%. The seven giants had a total market capitalization loss of about $58 billion (approximately 4.21 trillion yuan).