Goldman Sachs: Path of Least Resistance Is Up, Market Tilts Bullish in Coming Weeks
Nashnova编辑部
Goldman's trading desks are aligned: light positioning, improving macro, and collapsing volatility point to an upward path of least resistance over the coming weeks — hedge fund net buying is accelerating and retail inflows just hit the largest weekly level since September 2022.
Why does Goldman say the path of least resistance is up?
Futures desk strategist Emily Robosson notes that since August 4, the three-month cost of carry on Nasdaq futures has risen steadily — futures premium (the price gap between futures and spot, reflecting willingness to pay for future long exposure) keeps widening.
This means → the market is not just rallying; it is paying more to lock in forward long positions — a real-money signal from the funding layer.
Her core logic: cleaner positioning + improving macro backdrop = least resistance upward.
Volatility at year-lows — what does that tell us?
S&P 500 single-stock one-month implied volatility (the market's expectation for how much stocks will swing over the next month) fell another 2.7 percentage points last week, now 12 points below the July peak and at its lowest since January.
Goldman's volatility desk attributes the compression to three forces: dealers sitting on large gamma exposure (their hedging activity itself dampens swings), no fresh macro surprises, and persistent intraday mean-reversion patterns.
In plain terms = the market is "pricing out volatility across the board" — single-stock options have been heavily reset, dispersion trades (bets on individual stocks diverging) are hurting, and index vol cannot materialize in what the desk calls a period that "finally feels like summer."
Are FX and Asian markets confirming this picture?
FX volatility has fallen to historic lows in tandem, creating a cross-asset echo of equity vol compression.
South Korea's KOSPI volatility dropped more than 20 percentage points in a single week — the largest weekly decline in over two years — while the index itself surged.
This reflects a broader signal: the "low-vol + rally" combination is not confined to US equities — Asian markets are running the same playbook, which raises confidence in the pattern.
What are hedge funds and retail investors doing?
Goldman's prime brokerage data: hedge funds were net buyers of US equities every day this week, at the second-fastest pace in the past year. Information technology was the largest sector by dollar net buying — software driven by short covering, communications equipment and semiconductors by fresh long additions.
Yet overall positioning remains light: US long-short fund gross leverage fell to 203.5% (4th percentile over one year) and net leverage to 51.3% (13th percentile over one year).
This means → hedge funds are buying faster, but they are nowhere near crowded — significant dry powder remains on the sidelines.
Where is retail money going?
Bank of America strategist Michael Hartnett's fund-flow report shows last week's private-client equity net inflows were the largest single-week inflow since September 2022.
In plain terms = retail is not just warming up in sentiment — real money is pouring into equities, amplifying the institutional bid.
What is the biggest risk to this bullish call?
Light positioning + sustained inflows = upside momentum has room to run, provided macro does not deteriorate materially.
But Goldman itself flags the key variable: the speed of position rebuilding.
This means → if hedge funds reload too fast and positioning swings from "light" to "crowded," the upside runway shrinks — the shelf life of this bullish call depends on whether the position rebuild is gradual or a one-shot rush.
Content is for reference only, not financial advice.