Need to Know: ‘This is no longer a buy-the-dip market.’ Why this Goldman Sachs veteran is worried about the stock market.

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 stock futures on Thursday point to a rebound, with Walmart earnings in the wings, 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.

“This is new. Investors have shifted their trading behavior from a BTD “Buy the dip”
market to STR “Sell the Rally” market. This is a new change in tone and sentiment. This is something that I have not said often,” he writes.

The Goldman pro, who has studied flow data for two decades, also frets that already jittery markets are about to face vacation headwinds.

“This Friday starts the most common ‘two-weeker’ of the whole year for
global Wall Street returning to trade on September 5th (post U.S. labor day
holiday on 9/4),” he writes.

“This matters because there is low risk tolerance to add into any potential negative headlines,” he says, pointing to news on China and next week’s Jackson Hole conference and Nvidia results. “Is NVDA the most important stock world right now for market sentiment? I think so, this is a single stock microcosm of everything that went right in the first half. The mood is defense, not offence,” he says.

Rubner fears September’s seasonality gloom will get pulled forward ahead of that vacation period. He notes the median return for the S&P 500 in September since 1928 is a negative 1.56%, and 1.21% for the Nasdaq 100 Index,
making it “the worst month of the year.”

The markets

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Stock futures


are up 0.2% across the board, with the yield on the 10-year Treasury
up 2 basis points to 4.290%. Oil prices are getting a modest bump, while China’s CSI 300
saw its first positive session in six.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

will report results ahead of the open, and analysts expect the retail behemoth will hold onto market share. Earnings from luxury group Tapestry
are also due, with Ross Stores
and Applied Materials
coming after the close.

Late Wednesday, Cisco Systems
gave a conservative outlook that spooked some investors, but the networking giant’s shares are bouncing. Avnet
 is up 6% after upbeat results from the electronic-components supplier. Wolfspeed
is down 13% after the silicon-carbide chip company reported widening losses that it expects to worsen.

U.K. defense group BAE Systems
said it’s buying the aerospace business of Ball Corp.
for $5.5 billion.

Weekly jobless claims and the Philly Fed manufacturing survey are due at 8:30 a.m., followed by U.S. leading economic indicators.

The number of retirement millionaires surged in the second quarter thanks to improving markets and steady contribution rates, Fidelity said.

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The chart

The San Francisco Fed says that U.S. households will run out of COVID-era extra savings, credited for helping keep retail sales afloat in recent years, by the third quarter of 2023.

Also weighing in on when the excess savings will disappear was a team led by JPMorgan’s Dubravko Lakos-Bujas, head of U.S. equity strategy, who offered up this chart:

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JP Morgan

“Currently we estimate excess household liquidity adjusted for inflation at [approximately] $1.4 trillion to fully drain by May’24 assuming a steady depletion rate,” he and his team write in a note on Thursday. “Our concern is whether excess liquidity will even support above-trend consumption for that long.”

The tickers

These were the top-searched tickers as of 6 a.m. Eastern:


Security name


AMC Entertainment

T2 Biosystems


Talmora Diamond



Mullen Automotive



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