Goldman Sachs: Market "fear of falling significantly behind" sentiment is back
Goldman Sachs stated that it will start a dialogue on FOMU (fear of materially underperforming) this week. The indicator, which is considered to reflect the trading activities of retail investors, has exceeded the high point in January 2021. Retail investor-favored stocks continued to soar throughout the week, indicating that the largest holders of US stocks, the American public, have achieved victory in the battle against short sellers. Keep an eye on SPY and QQQ next week
This week, the US stock market hit a historic high, with retail investors initially experiencing a surge in group-held stocks, followed by a cooling off of the uptrend. Traders are closely monitoring the capital flow of retail investors in the stock market.
Scott Rubner, Managing Director of Global Markets at Goldman Sachs, wrote in a report to clients on Friday that the US market entered a positive trading window for 60/40 investment portfolios this week, and I am starting a conversation about FOMU (fear of materially underperforming).
On Thursday, the off-exchange trading volume on platforms matching broker orders reached 51.6%, exceeding the previous high of 50% in January 2021. This indicator is considered reflective of retail investors' trading activities.
Rubner noted that in the $78 trillion US stock market, the general public holds 39% in cash stocks and up to 65% including mutual funds and ETFs. In this scenario, I would typically hold fewer short interest positions.
The resurgence of interest from retail investors in the US stock market coincides with the explosive performance of retail-held stocks like GameStop (GME) this week. In the first two trading days of the week, both GME and AMC saw triple-digit surges in their stock prices. However, from Wednesday to Friday, GME experienced three consecutive days of sharp declines as traders sold off their positions. By the end of Friday, GME had dropped by 65% from its high on Tuesday, while AMC dropped by 63%. Nevertheless, GME still ended the week with a 27% gain, and AMC with a 51% gain.
In response to this, Rubner stated that the largest holders of US stocks, the American public, have just achieved a victory against short sellers. Next week, pay attention to the funds flowing into the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ).