MW Retail investors bought the dip after hot CPI. This Goldman strategist says the tide is about to turn.

By Steve Goldstein

All the dips are getting bought these days.

The S&P 500 SPX initially fell as much as 1.1% after the hotter-than-forecast consumer price index report, but it didn't stay that way, with losses trimmed to 0.3% by the end of the session on Wednesday.

Scott Rubner, tactical strategist at Goldman Sachs, credits one factor: retail investors buying the dip.

"Retail [was] buying the early am dip this morning post CPI," said Rubner in an email to clients. "Everyone is in the pool (in Florida), including retail traders, 401k inflows, start of the year allocations, and corporates," said the West Palm Beach, Fla.-based strategist.

But he said the tide is about to turn. "This is the last bullish email that I will send for Q1 2025 as the flow demand dynamics are quickly changing, and we are approaching negative seasonals," he said.

The E-Mini S&P 500 (ES00) futures contract is hovering near its 50-day moving average, with key thresholds being tested.

His analysis of commodity trading advisor trend followers is that they have much more selling to do if stocks fall than buying if stocks rise.

January and February are the largest months for inflows into 401(k) and 529 plans, but this flow is expected to fade soon.

Corporates are busy buying a record $1.16 trillion of shares this year, but activity will slow after March 16.

Retail investors have been net buyers for 22 consecutive days, with the top three largest buying days on record. However, this trend may be unsustainable, he said.

-Steve Goldstein

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 13, 2025 03:32 ET (08:32 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.