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Goldman Says “Don’t Buy This Dip” And Here’s Why…

Courtesy of ZeroHedge View original post here.

At the start of the month, Goldman trader John Flood correctly said that we are entering the best 2-week seasonal period of the year, with the first 18 days of the month traditionally the strongest period for markets…

… and followed up with a prediction that shorts will have to cover, which they did during a period in which we saw 13 out of 16 trading days hit new all time highs.

Of course, it all came crashing down in the last 3 days when the S&P slide accelerated, culminating with a scary rout on Monday when tumbling yields sparked a panic that the US economy is headed straight into a stagflationary crash.

And yet, with futures rebounding and traders clearly showing a desire to catch what has been the fastest falling knife in months, we were surprised to read that the same John Flood who correctly predicted the market ramp in the first half of July, has now flipped completely and in a note published overnight writes "don't buy this dip." He explains why:

 

And here are the 10 key bearish developments Flood is monitoring:

1) Covid headlines over the weekend were the most negative that I have seen in 2021. Here are the 5 that stood out to me…

  • U.S. infections surged more than 60% last week, topping a 16% global increase. Delta cases may be undercounted, former FDA chief Scott Gottlieb said. The Dr. warned that the US is “vastly underestimating” the level of COVID delta spread domestically. CNBC
  • The CDC warns of a “pandemic of the unvaccinated” as cases, hospitalizations, and fatalities rise in those parts of the country with low inoculation rates. BBG
  • CDC says other major US cities will probably follow LA and reimpose mask mandates as COVID statistics continue to deteriorate. FT
  • First Olympic athletes in Tokyo test positive for COVID, just days before the games are expected to commence (Coco Gauff the highest profile U.S. athlete to withdraw)
  • The UK said travelers from France will need to quarantine for 10 days regardless of vaccination status, an announcement that “leaves holidays in disarray”. London Times

7) AKA without recent stellar price action on FAAMG the market would be in some trouble…

10) On 1 year look back Fundamental L/S positioning has come in significantly….on a 3yr look back still elevated….


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