Is it time to bargain hunt? Goldman Sachs: U.S. stocks will usher in a brief "buying opportunity" period

Scott Rubner, from Goldman Sachs Group, stated that US stock investors will have a brief "buying opportunity" window at the end of this month, as selling pressure from systematic funds eases and companies increase stock buybacks.

The Goldman Sachs Global Markets Division Managing Director and Tactical Expert wrote in a report to clients on Monday, "This will be my last bearish view on the August stock market, as we are ending the most severe period of supply-demand imbalance in August." He said, he will switch to a tactical bullish view on US stocks on August 30.

Rubner advised investors at the end of June to reduce exposure to the US stock market after July 4, as he believed the market was in the "final stage of liquidity-driven rally" before July 17. Time has proven his point: the S&P 500 index fell by about 6% after hitting a record high on July 16.

After experiencing wild fluctuations last week, US stocks remained almost unchanged on Monday, as concerns among investors about the Federal Reserve waiting too long to cut interest rates sparked significant market volatility. The S&P 500 index has closed lower for the past four weeks, marking the longest consecutive decline since 2023. According to Goldman Sachs data, in the past month, rule-based systematic funds following market signals and volatility patterns have sold $109 billion worth of global stock futures.

Rubner believes that selling pressure will continue in the next seven days, but he stated that he "sees enough evidence and position reductions to suggest that the worst of the market's technicals are behind us."

He said the rebound in September "will be super clean." He "will buy on dips in the first half of this month and will remind everyone when things become clearer."

He wrote that another reason for a possible market rebound is, "The buyback window from August to September has historically been strong," second only to November to December. He added:

"We currently estimate that 90% of stocks in the S&P 500 will be in the buyback window, which will close again on September 6. Companies may take advantage of this decline and could buy $4.75 billion worth of stocks daily before the window closes."

However, Rubner warned investors that after a certain point in September, the outlook for US stocks will deteriorate, as the second half of this month is the worst two weeks for the stock market this year. He wrote that for the remainder of this year, the market "really won't have a clear upward trend" until the fourth quarter and after the US presidential election in November.