Speculative Trading Indicator 3-Month Changes While the U.S. stock market may continue rallying in the near term due to strong earnings and positive trade developments, the heightened speculative activity raises the risk of a notable pullback in the foreseeable future. Image: Goldman Sachs Global Investment Research
Performance of the Most Shorted Stocks Relative to Russell 3000 Over the last 3 1/2 months, the most heavily shorted stocks have experienced extraordinary rallies, significantly outperforming the broader market. Image: Deutsche Bank Asset Allocation
U.S. Credit Card Debt Rising credit card debt shows weakened repayment discipline and financial strain from inflation in basic living costs, creating a feedback loop where increased debt and fees further hinder consumers’ ability to restore financial stability. Image: Yahoo Finance
U.S. Stock Market Valuations – Combined P/E Ratio While high P/E ratios in US tech stocks may indicate promising growth, they also warn investors of potential overvaluation and the risk of sharp market downturns. Image: Topdown Charts
S&P 500 – 13-Week and 26-Week Moving Average The S&P 500 shows a positive medium-term trend, indicated by moving average crossover signals. Specifically, the 13-week moving average remains above the 26-week moving average and continues to rise, typically signaling sustained bullish momentum. Image: Bloomberg
Each Component of the Speculative Trading Indicator Screens as Elevated vs. History All three core components of Goldman Sachs’s speculative trading indicator—unprofitable, penny, and high EV/sales stocks—are trading near the extreme upper deciles, reflecting a highly speculative market environment right now. Image: Goldman Sachs Global Investment Research
Average S&P 500 Price Returns Following Sharp Increases in Speculative Trading Indicator Sharp increases in speculative trading activity serve as a leading indicator of a market cycle marked initially by above-average returns, followed later by a heightened risk of downturns. Image: Goldman Sachs Global Investment Research
U.S. Money Supply M2 The pickup in the U.S. M2 money supply matters because it signals increasing liquidity that—if excessive relative to economic output and accompanied by rising velocity—could reignite inflationary pressures. Image: Deutsche Bank
Reserves in Different Currencies While the USD share of global FX reserves has slipped somewhat, it remains close to 60% and continues to be the leading global reserve currency by a wide margin. Image: Deutsche Bank
S&P 500 vs. 60/40 Portfolio Since 2020, the S&P 500 has delivered higher returns than the 60/40 portfolio but with greater volatility, while the 60/40 portfolio has provided more stability at the cost of lower overall gains. Image: Bloomberg
NYSE Margin Debt The current high—but not extreme—levels of margin debt, compared to past blow-off tops, suggest frothy market conditions with some room for additional leverage. Image: Deutsche Bank