Anticipated Rise in Stock Market Levels in the Near Future
The stock markets today are showing a near V-shaped recovery since the plummet in early August, with a significant rise predicted based on the current situation with quantitative strategies. This optimistic outlook is attributed to the expected increase in buying pressure on the stock market today as volatility decreases and investors, along with algorithms, return.
Notable investment funds are expected to potentially drive a strong rise in stock prices today. These include Klaus Hommels' Lakestar Continuation Fund I, with $265 million in capital, supported by institutional investors like Lexington Partners and Industry Ventures. This fund focuses on secondary liquidity in successful startups.
Other funds include the Patriarch Classic TSI Fund, which invests in trend-strong stocks in Germany and the USA, and the recently closed Legence IPO, which raised $780.2 million for general corporate purposes, signaling active market inflows. Potential inflows of billions could soon be directed towards the stock market today.
Barclays predicts that funds will increase buying pressure if the stock market today stabilizes and economic data improves. Long-term investors might find it beneficial to buy stocks, taking advantage of remaining discounts after the recent increases. However, short-term investors should exercise caution before speculating on strongly rising prices, as the risks of losses are high, especially over a few days and weeks.
Trend followers, volatility strategies, and others exited stocks en masse due to the spike in market volatility in early August. The return of investors and algorithms is expected to be driven by the decrease in market volatility. Anshul Gupta, head of European Derivatives and Global QIS, believes the normalization process could be faster this time, taking weeks rather than months.
The expected increase in buying pressure could lead to the stock market today reaching new all-time highs. Prices of stocks could reach new all-time highs due to these inflows, making it an exciting time for investors looking to capitalise on the market's recovery.
