How to view the sluggish trading volume of US stocks? Goldman Sachs and JP Morgan: "Buyers are on strike," "tactically bearish"

As the overnight triple whammy of stocks, bonds, and currencies replays in the U.S., trading volume in U.S. stocks has sharply declined, with liquidity nearing historical lows.

On that day, the trading volume across U.S. exchanges fell 35% compared to the 20-day average. More concerning is that liquidity has nearly vanished, with the order book depth for S&P 500 futures at only $2 million, far below the historical average of $13 million.

Last week, the order book depth for S&P 500 futures hit a record low of less than $1 million. The order book depth is a real-time display of the prices and quantities of buy and sell orders, reflecting market health and liquidity levels.

According to previous mentions by Wall Street Insight, the trading volume in the U.S. stock market that day was far below the average level in April, at about 13.5 billion shares, significantly down from the normal 20 billion shares.

Goldman Sachs warned that a "buyer strike" is spreading in a fragile market, pointing out that the technical indicators for the S&P 500 are sending warning signals. JPMorgan Chase maintains a tactical bearish outlook on the S&P 500.

Goldman Sachs: Witnessing a "Buyer Strike," JPMorgan: Tactical Bearish

In response to the sluggish trading volume in U.S. stocks, Goldman Sachs chief trader John Flood noted in a report, "We are witnessing a buyer strike in a fragile market."

According to Goldman Sachs Prime brokerage data, although there was the largest nominal short covering globally since July 2024 last week, the demand for covering clearly weakened on Monday, with long-term investors remaining quiet. Most of the trades seen from this group were passive sell orders of tech giants' stocks.

Additionally, Flood stated that from a technical perspective, the 50-day moving average of the S&P 500 (5,685 points) is currently still below its 200-day moving average (5,750 points), which is an unhealthy signal.

JPMorgan's Andrew Tyler also holds a similar view in his latest report. He shifted from bullish to bearish about two months ago, just as the market hit an all-time high:

"Tactically bearish. Last week, we mentioned that the S&P 500's range is between 5,200 and 5,700 points. The longer this trade war lasts, the more that range will shift downward. As the market reaches a consensus on the overall impact of the tariff war, 5,000-5,500 points may be more appropriate."

However, Flood also mentioned a glimmer of hope for the stock market: although stock buybacks are currently in a blackout period, it will end this Friday (April 25).

Moreover, Goldman Sachs strategist Tony Pasquariello provided another ray of hope in a weekend report:

“While it remains to be seen whether a lasting meaningful agreement can be reached in the next 80 days, it seems we have entered the second phase, with trade policies leaning hawkish but not extreme. If observed correctly, the market now needs to weigh the likelihood of reduced negative tariff news against the performance of U.S. economic data.”