According to Goldman Sachs, there are four reasons why the stock market is poised to continue rising to record highs

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• The US stock market will continue to recover from recent all-time highs, says John Flood of Goldman Sachs.

• Market tailwinds and seasonality suggest further opportunities ahead as bullish sentiment has not yet peaked.

• Individual investors often sell stocks to cover taxes, leading to market declines and subsequent recoveries on tax day.

This year's stock rally has even more gas in the tank, according to a Goldman Sachs strategist.

John Flood, head of equity trading for the Americas in Goldman's global banking and markets division, said in a briefing on Friday that investors worried about a stock market bubble can relax as he expects the S&P 500 to be out will continue to rise for four reasons.

First, the strategist predicts a market rally in late April as investors traditionally take profits ahead of tax season, leading to a temporary sell-off before a rebound later in the month.

“Retail investors tend to sell stocks to pay their tax liabilities – which means we often see the market slide towards tax day and recover afterwards,” he said.

Second, he pointed out that listed companies continue to be important buyers of their own shares. In this case, the shortage in stock supply is likely to lead to huge market demand and thus an impending stock rally.

“The buyback offer for companies remains robust. We expect $925 billion in buybacks this year,” he said, citing Goldman Sachs research.

Third, future confidence rests on money market funds, which have seen massive inflows of $1.6 trillion since 2023. For Flood, this shows that “there is still a lot of dry powder out there” for investors to invest in the stock market.

Finally, Flood notes that current sentiment doesn't exactly scream “all-time bullish” yet, as hedge funds have experienced recent cash outflows. The highest uptrend is usually a contrarian indicator, indicating that the next move in stocks is likely to be down, but the market is not there yet.

“Hedge funds have been net sellers of stocks and have significantly increased their short-selling activity in recent weeks,” he said.

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