The S&P 500 may end November essentially flat, but the path forward looks meaningfully clearer as volatility calms down, stock market breath improves and trend-following strategies turn into buyers, according to Goldman Sachs Group Inc.’s trading desk.
Several indicators point to stabilization heading into December. Market breadth, measured as the five-day average of S&P advancers minus decliners, collapsed earlier this month to minus 150, indicating “a pretty bad damage beneath the surface,” Goldman’s Lee Coppersmith wrote in a note to clients. Heading into Thanksgiving, it rebounded back to the +150 area. “It’s a big shift – broader participation, not just a narrow squeeze, and another sign that the market cleared a decent amount of stress mid-month,” he added.
