SP500 LDN TRADING UPDATE 28/04/25
WEEKLY BULL BEAR ZONE 5482/92
WEEKLY RANGE RES 5700 SUP 5400
DAILY VWAP BULLISH 5395
WEEKLY VWAP BULLISH 5368
DAILY ONE TF UP 5482
WEEKLY BALANCE 5554/5127
MONTHLY ONE TF DOWN 5997
GAP FILL LEVELS 5339 - 5610
WEEKLY ACTION AREA VIDEO TO FOLLOW AHEAD OF NY OPEN
GOLDMAN SACHS TRADING DESK VIEWS
U.S. EQUITIES UPDATE: WEEKLY SUMMARY
This week, the S&P 500 rose by 4.6%, the NASDAQ by 6.4%, and the Russell 2000 by 3.8%. The yield on the U.S. 10-year Treasury eased by 7 basis points to 4.25%, and the VIX decreased by 15.2% to 25.05. From a market flow perspective, long-only investors were net buyers by $1 billion, while hedge funds were slight net sellers. We continue to observe a moderation in supply and emerging demand in supercap tech stocks, indicating a positive shift in our desk's supply/demand outlook. Demand elsewhere seemed driven by coverage needs. We estimate foreign investors have sold approximately $60 billion of U.S. stocks since March, with European investors leading the selling.
Currently, 30% of S&P market capitalization has reported earnings, with an additional 40% set to report next week. So far, 46% of companies have beaten earnings expectations by more than one standard deviation, below the historical average of 48%. Only 10% have missed by more than one standard deviation, also below the historical average of 14%. Despite the macro environment, earnings beats are not being rewarded, with median stock performance only 50 basis points above average, compared to the historical 101 basis points. Conversely, earnings misses have underperformed by 247 basis points, worse than the historic average of 206 basis points.
Looking ahead to next week, the implied move for the S&P through May 2 is 2.96%. Attention will be split between micro and macro factors, with the Federal Reserve entering its blackout period on April 26. On the micro side, focus will be on earnings reports from 40% of S&P market cap. Additionally, 30% of S&P 500 companies will enter their buyback open window next week. On the macro side, key indicators of labor market health will be monitored, including JOLTS on Tuesday, ADP on Wednesday, Jobless Claims on Thursday, and Non-Farm Payrolls on Friday. Other important events include Q1 U.S. GDP and PCE data on Wednesday, and the Bank of Japan's decision on Thursday, with no rate change expected. National elections are scheduled in Canada on Monday (April 28) and in Australia and Singapore on Saturday (May 3).
DERIVATIVES UPDATE:
Volatility continued to decrease today, with both fixed strike volatility and skew trading lower into the weekend. To capitalize on a gradual decline in volatility, the desk recommends buying VIX August 19 17 1x2 put spreads. While the volatility of volatility remains elevated post-liberation day, realized volatility is compressing, offering attractive ratios in VIX. We did not achieve the daily straddle for the first time this week (1.10%), although the intraday band remained at 1.3%. Overall, intraday moves averaged over 2% for the week. Earnings will be the primary focus next week, alongside macroeconomic data including Q1 GDP figures and April Non-Farm Payrolls, with the market currently implying a 2.5% move.
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Past performance is not indicative of future results.
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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!