Retail Bought the Dip—Goldman Sees Trouble Ahead

Dip Buying Continues, But a Shift May Be Coming Goldman Says

The S&P 500 initially fell as much as 1.1% on Wednesday after a hotter-than-expected consumer price index (CPI) report. However, the losses didn’t last, with the index recovering to close down just 0.3%.

Scott Rubner, a tactical strategist at Goldman Sachs, attributes the swift rebound to one key factor: retail investors buying the dip.

“Retail was buying the early morning dip post-CPI,” Rubner wrote in a client email. “Everyone is in—retail traders, 401(k) inflows, start-of-the-year allocations, and corporate buybacks.”

However, Rubner believes this bullish momentum may be nearing its end. “This is the last bullish email I will send for Q1 2025,” he warned, citing shifting market dynamics and the arrival of negative seasonal trends.

The E-Mini S&P 500 futures contract is hovering near its 50-day moving average, testing key technical levels. Rubner’s analysis suggests that commodity-trading adviser (CTA) trend followers have more selling pressure ahead if the market declines than buying support if it rises.

January and February typically bring strong inflows into 401(k) and 529 plans, but that tailwind is expected to fade soon. Meanwhile, corporate stock buybacks are on pace for a record $1.16 trillion this year, though activity is likely to slow after March 16.

Retail investors have been net buyers for 22 consecutive days, including three of the largest buying days on record. But Rubner cautions that this level of demand may not be sustainable for much longer.