0-DTE Options Lock S&P 500 into 27-Day Narrow Range; Goldman Sachs Warns Market Is Hard to Play
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The S&P 500 has gone 27 consecutive trading days with intraday swings under 1% — the longest streak since Covid. Goldman Sachs blames the unnatural calm on structural suppression from 0-DTE options and warns that positioning has dropped to near one-year lows as an autumn correction window opens.
Twenty-seven days under 1% — why can't this market move?
The S&P 500 has logged 27 straight sessions with intraday ranges below 1%, the longest run since the pandemic.
Goldman trader Brian Garrett points to 0-DTE options — contracts that expire the same day, with both sides closing out by the bell — and their massive "premium harvesting" strategies that cap the index from the open.
This means → on days without a breaking catalyst, these ultra-short-dated options act like a net, pinning the index inside an abnormally tight band.
Oil and rates push down, earnings push up — who wins?
Goldman's Tony Pasquariello frames the current setup as a "tug of war": rising oil prices and interest rates weigh on the market, while corporate earnings growth provides a floor.
Late last week the S&P 500 fell four days in a row, then staged a "textbook" test of its 50-day moving average and held.
In plain terms = the market has no reason to break down and no catalyst to break out, so it grinds sideways.
Goldman forecasts a September hike — but says the case is weak?
Chief US economist David Mericle has pencilled in a 25-basis-point hike at the September FOMC.
Yet he adds that "the economic case for raising the fed-funds rate is not compelling," arguing the inflation overshoot is driven by one-off factors. Core PCE — the Fed's preferred inflation gauge — has already fallen to roughly 2.5% annualised over the past three months.
This means → Goldman's own read is that a hike would look more like a closing move than the start of a new tightening cycle.
Calls to slow AI are actually bullish?
Goldman cites Rich Privorotsky's take: the people at the very frontier of AI are calling for a slowdown to address safety and alignment concerns.
This reflects a counterintuitive signal — demanding the brakes implies the technology is already moving fast enough to matter, which is itself a "massive endorsement" of AI's effectiveness.
How low has positioning dropped?
Goldman's prime-brokerage book shows net exposure at the 26th percentile over the past year. Last week's macro-product sell-off was the largest since "Liberation Day."
The US equity portfolio-strategy sentiment reading hit −0.5 standard deviations, the lowest since March and likewise at the 26th percentile over the past decade.
This means → most funds have already de-risked voluntarily, but systematic funds — quant strategies that rebalance mechanically — still face forced selling pressure if prices fall further, potentially amplifying any short-term drop.
A rough autumn, a better year-end — what does history say?
Pasquariello's base case: the market completes a necessary correction in September–October, setting up improved technicals for the final two months of the year.
Goldman's review of seven past hiking cycles shows the S&P 500 fell an average of 2% in the three months after the first hike, then rose an average of 9% over the following twelve months. The ultimate path depends on earnings growth; the speed and size of rate moves are the main source of volatility along the way.
Energy is up 44% year-to-date, tech up 23%. Pasquariello says he is not inclined to exit either trade for now.
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