• Goldman Sachs predicts record highs for stocks this week as $85 billion flows into the stock market.
• Systematic trading strategies and corporate buyback programs are driving demand, Goldman said.
• “The paint trade for equities is higher through mid-September after renewed leverage was given the green light on Friday.”

Goldman Sachs says stock markets could hit record highs this week as $85 billion worth of “emotionless demand” floods stocks.

The bank’s trading desk, led by CEO Scott Rubner, said in a note Monday that there was little resistance to new all-time highs in a week of historically low market liquidity.

“I’m watching the all-time highs again and I think we’re going to hit new highs this week. I think FOMO will increase when the headline about the new all-time high comes out,” Rubner said.

He added: “We estimate that this week, during the most illiquid week of the year, there is $17 billion worth of emotionless demand between robots and companies every day.”

The Dow Jones Industrial Average hit a record high at the close on Monday, and as of Tuesday morning, the S&P 500 is less than 1% away from its own all-time high.

Potential gains in equity markets this week are being driven by Wall Street’s professional trend followers, known as CTAs. Rubner said “everyone is getting back in the pool” after systematic trading strategies exceeded their downside risks during the sell-off earlier this month.

“The paint trade for equities is higher until mid-September after the green light for renewed leverage was given on Friday,” Rubner said.

Corporate share buyback programs are also contributing in part to this increase and are expected to last until September 13, when the next trading freeze will come into effect before the release of third-quarter results in mid-October.

“The August-September window for corporate buybacks is historically strong. This two-month period is the second best of the year with 20.7% of executions. GS Corporate Buyback estimates approvals at $1.15 trillion and value at $960 billion,” Rubner explained.

Finally, retail investors were unfazed by the recent volatility in the stock markets and “demonstrated a good hand by buying when prices fell,” said Rubner.

Whether Rubner’s prediction that the S&P 500 will soon reach record highs is correct will likely depend on Nvidia’s second-quarter results, which are scheduled to be released after the market closes on Wednesday.

With a market valuation of $3.12 trillion, the AI ​​chipmaker represents nearly 7% of the index, meaning any move in Nvidia stock can have a significant impact on the broader market.

Ultimately, Rubner expects that the record highs on the stock markets in the second half of September, which has historically been a weak time for stocks, will be quickly followed by a volatile trading collapse.

From there, Rubner said, the S&P 500 could rise to 6,000 by the end of the year, which would represent an upside potential of about 7 percent from current levels.