By the end of the year, the S&P is expected to surpass 6000 points! Goldman Sachs' fund flow expert declares that the sell-off in US stocks has been "cancelled"

Last month, Scott Rubner, a fund flow expert at Goldman Sachs who accurately predicted the summer stock market pullback, predicted that by the end of this year, the U.S. stock market will experience a melt-up. In a recent report, Rubner further expressed his bullish view, forecasting that by November 1st, before Halloween, the S&P 500 index will not reach 6000 points, but by the end of the year, it will surpass 6000 points.

In the report, Rubner, Managing Director of the Global Markets Division at Goldman Sachs, wrote: "The stock market sell-off has been canceled, and the year-end rebound is starting to resonate, with clients shifting from left-tail hedging to right-tail hedging." "Given the so-called 'FOMU', many concerns about the poor performance of benchmark stock indices, institutional investors are now forced to enter the market."

Rubner cited data from over 90 years to prove that from mid-October to the end of the year, the U.S. stock market tends to perform well. Since 1928, the average return of the S&P 500 from October 15th to December 31st each year has been 5.17%. This means that by the end of this year, the S&P will rise from the close of nearly 5860 points on Monday to 6160 points.

For every election year since 1928, the average return of the S&P 500 from October 15th to December 31st has been even higher at 7.04%. Based on this calculation, from the close on Monday, the S&P is expected to rise to 6270 points by the end of this year.

When it comes to the Nasdaq 100 index, since 1985, the average return from October 15th to December 31st has been 12.08%. Based on this calculation, from the close on Monday, the Nasdaq 100 is expected to rise to 22900 points by the end of this year. However, in election years since 1985, the performance of this index from October 15th to December 31st has been lower than non-election years, with an average return of 7.29%.

Since 1979, the Russell 2000 index has had an average return of 7.92% from October 15th to December 31st. Based on this calculation, from the close on Monday, this index is expected to rise to 2425 points by the end of this year. In election years since 1979, the average return of this index from October 15th to December 31st has been even higher at 10.08%.

Rubner mentioned the winners in the seasonal year-end rally, pointing out that in the fourth quarter of each year, cyclical stocks tend to outperform defensive stocks. He also mentioned some factors influencing the market, including next week being the "Super Bowl" of this earnings season, as about 37% of the S&P 500's market value components are set to release earnings reports Rubner's report states that from the perspective of fund flows, the US stock market is entering a positive trading environment. One indication is that according to Goldman Sachs' estimation, the quiet period for stock buybacks by listed companies will end on October 25th. This year, listed companies, which have been the largest buyers in the US stock market, will see the highest proportion of buybacks in November and December, with an expected buyback scale of up to $60 billion per day. Goldman Sachs estimates that the buyback execution scale in November and December accounts for 21.1% of the year.

Another indication is that before Halloween, the largest sellers in the US stock market—mutual funds—are gradually exiting. Rubner's previous report mentioned that October is the last month of the fiscal year for most mutual funds this year. October, being the end of the fiscal year, may have a negative impact on the price trend for popular mutual funds, as poorly performing funds since the beginning of the year may sell off due to tax losses, while funds with excellent performance may reduce holdings or take profit.

In this report, Rubner states that the total asset value of 756 mutual funds is $1.853 trillion, and their fiscal year will end on October 31, 2024.

Furthermore, data since 1996 shows that American households tend to buy stocks in November each year. The inflow of funds into stock mutual funds and ETFs in November has significantly increased, ranking second only to January and April in terms of the proportion of total asset management scale, while October sees fund outflows.

Regarding the upcoming US election in November, Rubner's report mentions that after the election, the volatility in November will reset, potentially leading to systematic strategies (volatility control) and multi-manager funds re-leveraging, and even some short-term opportunistic YOLO mentality may show positive trading performance.

A recent report from Wall Street News mentioned that the strong growth in US non-farm payrolls announced earlier this month has led Citi to believe that the market is refocusing on inflation expectations. As the US election approaches, political factors are gradually becoming an important variable affecting the market, with concerns about the impact of a Trump victory. In this report, Rubner also mentioned that Trump trades may make a comeback, stating that Goldman Sachs' trading desk is addressing relevant best implementation issues. This new trend expands the stock market's rebound