The S&P 500 is likely to extend its rally through the next couple of weeks, boosted by improving liquidity, falling volatility, reduced recession fears, and strong seasonal trends, according to flow strategists at Goldman Sachs.
Info via Bloomberg:
“We think this rally will continue for the next couple weeks but lose steam into August”
“We are entering the strongest month for the S&P historically” (July, with the first half of the month better than the back half)
Tailwinds cited:
- seasonality
- lower volatility supporting sentiment
- systematic investors still have significant capital to allocate
- improved liquidity
- sentiment improved with geopolitical tensions easing and optimism growing around trade negotiations and possible rate cuts
GS on risks:
- rally has been narrow
- lower-quality stocks leading
- bullish positioning rising sharply
This article was written by Eamonn Sheridan at www.forexlive.com.