Scott Rubner, Managing Director and Strategist of Goldman Sachs, stated that investors should be prepared to face a new high in the US stock market over the next four weeks, but also prepared to withdraw afterwards.
According to him, the US stock market is entering a "very positive four week stock trading window" and emphasizes that low volatility markets are very common in the weeks leading up to the end of summer, usually favorable for stock prices.
Prior to the emergence of a new low volatility environment in the stock market, the Chicago Board Options Exchange's Market Volatility Index (CBOE) experienced a historic decline of 62%, marking the largest drop in the 9-day "panic index".
Rubner said, 'We have just witnessed one of the largest and fastest withdrawals I have ever seen.'. He hinted that investors who withdrew during the epic selling wave in early August may now switch back to buying mode.
He further explained that about 50% of companies will enter a lock up period on September 13th, and there will be a large amount of stock buying from now until then.
The repurchase window for enterprises from August to September is at a historical high. The repurchase rate for these two months was 20.7%, the second highest of the year, "he added.
When to sell stocks?
However, despite Rubner's optimistic outlook, he still expects volatility in the stock market and is uncertain about whether there will be further gains after September 16th. He said, "I am bullish until September 16th. This is a time of seasonal change
Rubner's words are of great significance because he had accurately predicted the decline of the US stock market. He suggested in late June to reduce exposure to the US stock market after July 4th and believed that the stock market was in the "final stage of consolidation" before July 17th. The fact also proves that the S&P 500 index reached a new closing high on July 16th, and is currently down about 6% from that high level.
Late September will be a tricky trading environment, especially before the election, "he said.
When can I buy again?
Excluding the aforementioned fluctuations, Rubner still expects the US stock market to reach a record high by the end of the year. His year-end target price is 6000 points, which means the index will rise by about 7% from the current level.
Led by November and December, the S&P 500 index will reach a new high in the fourth quarter, "he predicted, adding that a record $7.3 trillion in US money market funds will flow into stocks and bonds after the US election in early November.