Goldman: We Are Entering The Best Two-Week Seasonal Period Of The Year For Stocks

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Bank of America warned that "it's all downhill from here" when its CIO Michael Hartnett looked at the second half of the year and warned that as the US moves from inflation to stagflation and from QE to QT, the "combo of rising Rates, Regulation, Redistribution (3Rs) & peak Positioning, Policy, Profits (3Ps)" assures low/negative returns in the second half (see here). In short, the party is over.

Well, Goldman disagrees, and in an a note from the tactical flow desk the bank has listed several reasons why the party is just getting started.

Putting the immediate past in context, Goldman writes that "the S&P 500 has seen 33 new all-time highs this year or 1 new ATH for every 3.73x trading days. Going back to 1928, only 1995 would annualize at a faster pace, 1 ATH per 3.27x trading days. And 53 new S&P 500 all-time highs since March 2020."

But more to the point, unlike BofA which believes the stellar H1 will be followed by a stagflationary H2, Goldman thinks equities will come out of the gates strong in July, and then slow down at the end of month after options expiry: "Positioning is un-stretched as we rally higher, we think investors will have FOMO to start the month."

Claiming that a "strong 1H, typically means strong 2H", Goldman seeks to ease some of its more nervous clients and notes that we are now entering the best two-week seasonal period of the year. Specifically the high point of this seasonal chart since 1928, is July 1st to July 16th.

Don't believe in technical mumbo-jumbo? Here are the rest of Goldman's tactical reasons why traders should be long stocks right now.

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