Goldman: "Positioning, Sentiment, & Liquidity All Incredibly Depressed. Feels Like We Are Due For A Real Pullback"

Some very concerning market observations from Goldman trader John Flood discussing the real rot below the market surface:

Monday was the lightest volume session of the year with 9.32b shares trading across all US equity exchanges breaking previous low mark of 9.4b back on 7/11/22. YTD daily avg for shares traded across all US equity exchanges sits @ 12.5b. Monday was also the lightest notional trading session of the year w/ $392b trading vs ytd daily avg of $638b.

Our desk was a 3 on 1 – 10 scale in terms of overall activity levels. I am personally taken aback by how resilient mkt has been over the past few weeks.

I don’t see L/Os putting their ~$210b of cash to work. I am seeing them use pockets of strength to sell lower conviction more illiquid names in block form and raise even more cash. Last week our desk had 11 blocks which is noteworthy.

Positioning, sentiment and liquidity all incredibly depressed. Feels like we are due for a real pullback but clearly it wont be a straight line down.

Is very clear to me that pain trade currently lives higher for 95% of investors I speak with. Worth noting corporate buyback blackout period ended Monday AM. The last 2 weeks our corp desk was very quiet during what has otherwise been a record year.

Demand we have seen has been less sticky investors adding length (really more so getting less short...CTAs def fall into this bucket). Pull back comes when this crew steps away which feels like it is around the corner.

More in the full note Goldman Sales and Trading note available in the usual place for professional subscribers