Investors taking part in late summer stock selling may have felt vindicated after Wednesday’s hawkish set of Fed minutes all but promised more rate increases, offering yet another reason to cash in on this year’s gains.
Attempting to cheer up the bulls, Mark Newton, head of technical strategy at Fundstrat, told clients that stock selling of late has been “very orderly” and merely a “short-term pullback, which should lead to a resumption of a rally.” But he cautions that this may not happen until after the Fed’s Jackson Hole summit in late August.
While stocks were in the grips of a rebound on Thursday, Goldman Sachs’ managing director Scott Rubner notes a “clear shift in sentiment over the past few weeks” across his trading calls. “This is no longer a buy-the-dip market,” he says in our call of the day.
In a note to clients, Rubner highlighted some market happenings that have got him worried. Among them, the S&P 500 closed Tuesday through the bank’s short-term commodity trading advisor threshold trigger of 4,462.10 for the first time since May 24th and below the S&P500 50-day moving average of 4,475. CTAs are a group of hedge funds that are guided by algorithms.
He said Tuesday also marked an all-time high for volumes of options linked to the S&P 500 with extremely small lifespan, known as 0DTEs. As MarketWatch’s Joe Adinolfi highlighted last week, a recent surge in those “zero-day until expiration” options has raised concerned among some market participants of a market selloff. The S&P finished 1.1% lower on Tuesday.
What else? Rubner says so-called “top book liquidity,” which he describes as the ability to transfer risk quickly, in S&P 500 e-mini futures has dropped by 56% over the past two weeks…Source – Read More!
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