SP500 LDN TRADING UPDATE 9/2/26
SP500 LDN TRADING UPDATE 9/2/26
***QUOTING ES1 CONTRACT FOR CASH US500 EQUIVALENT LEVELS SUBTRACT POINTS DIFFERENCE***
***WEEKLY ACTION AREA VIDEO TO FOLLOW AHEAD OF NY OPEN***
WEEKLY BULL BEAR ZONE 6900/6890
WEEKLY RANGE RES 7059 SUP 6847
FEB OPEX STRADDLE 6726/7154
MAR QOPEX STRADDLE 6466/7203
DEC 2026 OPEX STRADDLE 5889/7779
GAMMA FLIP LEVEL 6913
DAILY VWAP BULLISH 6898
WEEKLY VWAP BEARISH 6959
MONTHLY VWAP BULLISH 6865
DAILY STRUCTURE – BALANCE - 6965/6801
WEEKLY STRUCTURE – BALANCE - 7031/6801
MONTHLY STRUCTURE – TBC
Balance: This refers to a market condition where prices move within a defined range, reflecting uncertainty as participants await further market-generated information. Our approach to balance includes favouring fade trades at the range extremes (highs/lows) while preparing for potential breakout scenarios if the balance shifts.
One-Time Framing Higher (OTFH): This represents a market trend where each successive bar forms a higher low, signalling a strong and consistent upward movement.
One-Time Framing Lower (OTFD): This describes a market trend where each successive bar forms a lower high, indicating a pronounced and steady downward movement.
GOLDMAN SACHS TRADING DESK VIEWS
US equity rotations remain familiar: cyclicals over secular growth, value over duration, and cashflows over narratives. Domestically levered themes such as housing, infrastructure, and onshoring continued to work, while software, long-duration growth, and crypto lagged.
What changed materially is under-the-surface volatility and microstructure stress. The note highlights that 20-day factor volatility (Momentum, Growth, Size, Vol, Value) jumped to the highest level since 2021, consistent with an active unwind of crowded positioning and elevated single-stock dispersion.
Flow data reinforces that interpretation. From Jan 30 to Feb 5, hedge funds net sold US equities for a fourth straight week at the fastest pace since “Liberation Day” (as framed in the note). The selling was short-led rather than long de-risking, with shorts outpacing long buys by 2.5:1. Pressure was concentrated in single stocks, which represented roughly 70% of total net selling, and US single-stock shorting hit a record (in the dataset cited, since 2016).
Technology was the focal point. Information Technology was both the worst-performing sector and the most net sold, with one of the largest outflows of the past five years (per the note’s standardized measure). Shorts dominated flows by 5.4:1, and software accounted for about three-quarters of net selling within Tech. Positioning in software is described as extremely light, with net exposure at 2.6% of US net market value and a 1.3 long/short ratio, both flagged as new lows.
That extreme short crowding increases the odds of abrupt reversals. The GS “Most Short” basket squeezed nearly 9% in one day (Friday), its biggest such move since April 9, and its short-term realized volatility moved to exceptionally high levels. The note’s message is that elevated factor vol plus crowded shorts can generate violent counter-moves even if the broader style rotation remains intact.
Volatility and liquidity indicators tell a similar story. GS’s Vol Panic Index briefly spiked near the top of its range, implied volatility fell back, but put-call skew stayed steep, implying ongoing demand for downside protection. S&P futures depth dropped to a low percentile mid-week before rebounding, signaling a temporary but meaningful deterioration in liquidity.
Macro conditions are not described as breaking, but growth expectations are drifting lower. The note cites a cross-asset, forward-implied US growth measure around 1.9%, below GS’s 2.5% Q4/Q4 2026 forecast. The framing is that the environment is still “fine,” but the market is less willing to pay for duration while leadership and positioning reset.
The bottom line is a fragile setup: the authors favor keeping risk a bit smaller and maintaining hedges until technicals improve (better liquidity, less crowded shorts, more balanced positioning). Despite the turbulence, they emphasize that this remains a stock- and style-driven tape, with the same high-level rotations still in place.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!