Wednesday was one of the stormiest days in Wall Street's history.
The market exploded, setting records in both index movement and the volume of stocks traded.
In this post, you'll get a glimpse into Goldman Sachs' busy trading desk:
Record activity, aggressive buyers, and a sweeping market comeback.
Goldman Sachs' trading desk, through the eyes of John Flood – one of the market's senior and most influential figures – provides us with a rare glimpse into the beating heart of trading on Wednesday, and it was not just another ordinary day:
- This was a day that reminds us why we love this market so much.
"Our activity level was 9 out of 10," Flood describes the activity levels – meaning, almost at the maximum scale.
- Investors may have started the day frozen, perhaps even in shock, but very quickly the ice broke – and with force.
The result?
Activity at Goldman's trading desk recorded a +12.8% increase in activity compared to the average of the last 30 days, which unusually stood at a decrease of 169 basis points.
- A clear, and no less dramatic, trend reversal.
Who entered the game strongly?
Here's the fascinating story behind the numbers: Asset Managers returned to the scene in a big way with net buying of no less than $13 billion (!),
This happened as they chased the sharp positive market movement that surprised everyone.
- They did so by purchasing segments they themselves had recently sold:
- From artificial intelligence stocks, through semiconductor stocks, to megacaps and cyclical sectors.
- It was a real chase for opportunities!
High-touch funds did not lag behind, recording net buying of approximately $3 billion, while executing particularly aggressive hedges, mainly through macroeconomic products, alongside long-term technology purchases.
ETFs also surprised, accounting for 37% of total activity, a sharp increase compared to an average of only 28%.
- Liquidity is returning to the forefront, and ETFs are once again proving their power as a central tool in times of directional change.
The message emerging between the lines?
It appears that investors not only emerged from stagnation, they returned to offensive positions.
- This is seemingly a clear indication of a renewed appetite for risk, based on a feeling that the market is stabilizing again, and perhaps even embarking on a new bull run.
Have investors truly shifted phase, or is this a momentary enthusiasm?
We will know soon...