Institutional Insights: Goldman Sachs Tactical Flow-of-Funds: Year-End FOMO
GS Tactical Flow-of-Funds: Year-End FOMO
There are 18.5 days left to trade in 2024. The US equity market has hit 55 new ATH’s on pace for 56 this morning and higher in 10 out of the last 11 trading sessions. Cyber Monday deals keep getting extended and the US equity market rally is no different. These are the most important dynamics in the market place to close out
Seasonals are strong, best of the year. Since 1928, the S&P 500 median monthly return for December is +2.04%. These positive seasonals are led by the second half of December into a low liquidity trading environment.
The January effect is when the largest capital in the world gets deployed into the US equity market during the first few weeks of the year. Since 1928, the S&P 500 median monthly return for December and January is +3.83%.b. Record inflows into US stocks.
Daily passive “index” demand: There are more buyers than sellers. US Equities saw a whopping +$141.08 Billion worth of inflows over the last 4 weeks - the largest monthly inflows on record by far. All other equity funds ex-US saw outflows of $8 Billion during the last month.
Retail traders are back: Retail traders unite at the town watering hole. GS Equity Panic Index has taken out new lows and we are seeing retail activity to pick up. This can also been seen in record call options (largest on record) and high-flying names.
Liquidity = Good right now S&P 500 top book liquidity, or the ability to move risk quickly, is $21M today. This is the highest level in 6 months. Liquidity tends to decline during the last two weeks of the year, and we should expect to see larger market moves and more impact from trading
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!