On January 7th, Scott Rubner, Managing Director and Tactical Expert of Goldman Sachs Global Markets, stated that the US stock market experienced a significant sell-off at the end of December, while reduced liquidity exacerbated the impact of fund managers’ year-end rebalancing. However, there are now several factors indicating that institutional and retail investors will resume buying. After a significant rise in the S&P 500 index, pension funds may readjust their investment portfolios to balance stocks and bonds, while a decrease in liquidity exacerbates stock market volatility. Benefiting from the flow of institutional funds and the limited selling of so-called trend tracking systematic funds, Rubner now sees signs of a short-term tactical bullish pattern. In history, January is the month with the largest inflow of funds into stock ETFs and mutual funds, and hedge funds also tend to increase their total leverage ratio in January.
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