Last Thursday, when he reiterated his reasons to remain skeptical - and bearish - on this market, Goldman's flow guru Scott Rubner highlighted various technical, micro and macro considerations, and when responding to the top client question, namely "why did the most important stock in the world (NVDA) absolutely crush earnings and close up "only" 10bps on the day w/ a ~400bps reversal in NDX futures?", his response was that "there is a supply and demand mismatch and those dip buyers are already "very full". The US equity market has been trading, "Escalator up, "Elevator down " behavior."
And indeed, this behavior was on full display on Friday, when Goldman's Mike Washington writes that the bank's trading desk was relatively quiet, "a 3 on 1 – 10 scale in terms of overall activity levels" and when "markets were choppy, sentiment was challenged, and activity levels were muted to end the penultimate week of summer (third lightest volume session of the year)."
As the Goldman trader notes, "there weren’t many good explanations for the price action out there other than follow-throughs from NVDA + disappointing consumer retail prints that sent negative sentiment signals. Jackson Hole was largely a ‘nothing done’ and did not provide any new guidance on the medium-term outlook. Powell was vague around the neutral rate and while there may have been some hawkish undertones, our take is that it was benign enough for risk to continue to rally or be stable at a minimum."