The darkest moment has passed! Goldman Sachs experts accurately predict a buying opportunity for US stocks at the end of August amid this round of pullback
Investors will have a brief opportunity to buy US stocks at a low point at the end of August. Experts at Goldman Sachs predict that the most severe period of market supply-demand imbalance will end at the end of August, due to the easing of systematic fund selling pressure and companies increasing stock buyback efforts. In addition, the buyback window for companies in August to September is at a historical high, with 90% of S&P 500 component stocks in an open buyback window. Investors should be aware that the outlook for September may deteriorate, as the second half of September is the worst-performing two weeks in the stock market throughout the year
According to the financial news app Zhitong Finance, Scott Rubner, Managing Director and Strategic Expert of the Global Markets Division at Goldman Sachs, stated on Monday that with the easing selling pressure from systematic funds and companies increasing stock buyback efforts, investors will have a brief opportunity at the end of August to buy US stocks on dips.
He said, "This will be the last time I am bearish on the stock market in August, as the period of the most severe supply-demand imbalance in August is about to end." He will switch to tactically bullish on the stock market on August 30.
Rubner had previously advised reducing exposure to the US stock market after July 4 in late June, and believed that the stock market was in the "final stage of liquidity-driven rise" before July 17. The S&P 500 index hit a record high on July 16 and has since fallen by about 6% from that level.
After experiencing intense volatility last week, the stock market was relatively flat on Monday. Investors digested the sharp fluctuations caused by concerns that the Federal Reserve was waiting too long to cut interest rates. The benchmark index has fallen over the past four weeks, marking the longest consecutive decline since 2023.
According to Goldman Sachs data, in the past month, rule-based systematic funds following market signals and volatility patterns have sold $109 billion worth of global stock futures.
Rubner believes that selling pressure will continue in the next seven days, but he said, "There is enough evidence and position reduction to suggest that the worst of the market's technical aspects are behind us."
Rubner stated that he will "buy in the first half of September."
He mentioned another reason why the stock market may rebound is that the buyback window for companies in August and September is at historically high levels, second only to November and December.
Goldman Sachs currently estimates that 90% of S&P 500 component stocks are in an open buyback window, which will close on September 6. Rubner said, "Companies may take advantage of this decline, with their daily purchasing power value reaching as high as $4.75 billion before the window closes."
Rubner warned investors that the outlook will deteriorate after a certain point in September, as the second half of September is the worst two weeks for the stock market performance in a year.
Rubner stated that for the remainder of this year, the market will "not truly show a clear upward trend until the fourth quarter and after the US November election."