How does Goldman Sachs explain the stock market’s record highs?

Spark Trader Limited reports:

Three weeks ago, in the midst of second-quarter earnings, the U.S. stock market was surprisingly slow to break through all-time highs, even as companies posted their strongest earnings season ever. Against this backdrop, there was a quiet shift in the outlook of some big investment banks, including Goldman Sachs.

Goldman sachs was the first to warn the market in late July that stocks were entering their worst seasonal cycle of the year. At one point, Scott Rubner, the bank’s senior trader who tracks market liquidity, went so far as to list 10 reasons why the bank thinks investors should prepare for an August pullback.

Yet the market’s outperformance so far in August has been all the way up to Goldman’s strategists, who have not only avoided the firm’s gloomy outlook but also hit record highs on almost half the days.

Rubner released his latest analysis last week, arguing that the stock market rally is due to one word: retail investors.

“This is perhaps the most important stock market move of 2021 so far,” he explains in his latest Tactical Flow of Funds report.