Even though today global stocks rose to put an end to their longest losing streak since 2011–with eight straight down days through Tuesday–Goldman Sachs strategists are warning that there’s more selling ahead.
Now, I always advise taking market calls from Goldman with a grain of salt since the big trading house is perfectly capable of positioning itself against its own call. But at the least, I do see this as a sign of the growing Bearish stance on Wall Street. There are an increasing number of voices saying that we didn’t see a bottom to this Bear market in June.
The MSCI All Country World Index (ACWI) has dropped 9% since mid-August and would reach the lowest levels since the pandemic fallout of 2020 if its sinks through June’s nadir. The iShares MSCI All Country World Index ETF (ACWI) closed at $81.93 at its June 17 low. Yesterday it closed at $84.48. Today, September 7, it closed up 1.49% to $85.75.
In its note to clients Goldman Sachs called the July move a “bear market rally.” Strategists said “Its duration and magnitude were not unusual relative to the experience of previous decades. We expect further weakness and bumpy markets before a decisive trough is established.”
On the other hand, in the very short term, stocks could be setting up for a rally. In the past two decades, the MSCI All Country World Index has jumped an average of at least 1% over 10 and 20 days after nine-day losing streaks, according to data compiled by Bloomberg.
In other words, we don’t know where stocks are headed but it’s going to be a bumpy ride.
