How to view the significant rebound in U.S. stocks? Goldman Sachs: In a bear market, there are many long candles, and currently, the valuation shows limited upside potential

Goldman Sachs warns that bear market rallies are the norm, with uncertainty dominating market trends. In the past two weeks, U.S. stocks have rebounded sharply, fully recovering all losses since April 2. Goldman Sachs analyst Peter Oppenheimer recently stated in his research report that the recent sharp rebound in the stock market may just be a typical bear market rally, and the current market environment presents a dilemma for stock investors. Oppenheimer believes that the biggest driving force in the current market remains uncertainty, and investors have not truly turned bullish or bearish on the market: “The asymmetry of stock investment is poor. Sharp rebounds in a bear market are the norm, not the exception.” “If U.S. tariff policies are quickly revoked with little lasting economic damage, it indeed indicates limited downside risk. However, given the current valuation levels, the upside potential is also limited.” This market environment makes investing extremely difficult, with decision-making clouded by ambiguous headlines. Market participants must choose between chasing a weakening rally and risking a late exit or completely missing another round of a squeeze rally. A tricky market environment forces investors to "buy with their noses pinched" Many investors were forced to sell risk assets when the tariff outlook was uncertain in early April, but are now buying in during the rebound, with few investors having enough exposure to fully benefit from this performance. Nomura's cross-asset strategist Charlie McElligott described the current situation as “a disgusting stock trade and a scenario that no one wants.” McElligott confirmed in a report that the phenomenon of “being forced to buy back exposure while pinching their noses” is playing out in stock index options, “even though most investors detest the future macro growth outlook.” Historical data shows the rebound may be nearing its limit Data indicates that this rebound, one of the most severe intra-month rebounds in April historically, may have exhausted its upward potential. According to media statistics, since 1980, global stock markets have experienced several bear market rallies, averaging 44 days in duration with a 14% increase. Although this year's global stock market decline cannot officially be termed a bear market, prices have risen 18% from the intraday low on April 7. Academy Securities macro strategist Peter Tchir stated: “Interest rates and risk assets will continue to be driven by news headlines. Policy and trading will take turns driving the market.” Investor sentiment and positioning have become crowded Goldman Sachs Managing Director John Marshall wrote in another report that the financing spread—measuring the demand for long exposure through stock derivatives (such as swaps, options, and futures)—has decoupled from the recent stock market rally. “This indicates that macro investors have reduced their stock exposure during the recent strength.” Marshall expects this week to be particularly volatile, as the Federal Reserve meeting will take place, during which “comments regarding June/July will be especially important.” Systematic investors' buying is steadily increasing, providing support for the rebound. Goldman Sachs traders noted that systematic macro investors' buying climbed to $51 billion last week, with expectations to purchase $57 billion this week "The overall purchasing scale is not insignificant, but it is not larger either, because if the signal flips quickly, it will reduce the immediate speed of capital flow, and the volatility environment is higher than before." Other buying flows that supported during the rebound can be said to look more tense. JP Morgan's tactical positioning monitor is currently in a neutral state, with a weekly change indicating "moderate increase in positions." The leverage of hedge funds has rebounded month-on-month and is currently at the 96th percentile of the long-term range. Meanwhile, retail investors continue to increase their risk exposure. John Schlegel, head of JP Morgan's positioning intelligence team, stated: "Since 2017, retail investors have experienced the strongest buying month in our data, purchasing both individual stocks and ETFs simultaneously."