Rally or Trap? Goldman Warns Market Pain Isn’t Over

​Stocks may be ripping higher, but don’t pop the champagne just yet. According to Goldman Sachs, these rallies are more pain trade than payday.

After a steep bounce over the last two weeks, equity markets have been acting like they’re in full recovery mode. But Goldman’s Peter Oppenheimer says what we’re seeing is textbook bear market behavior—big, sharp rallies that look like turnarounds but often lead investors into traps.

Foggy Forecasts, Whiplash Moves
The market is still deeply uncertain. Nobody’s got a strong conviction—bullish or bearish. Instead, it’s a daily scramble driven by headlines, mostly around Trump’s ever-shifting tariff policies and how they’ll ripple through corporate earnings.

“If tariffs are reversed quickly, the downside might be limited,” Oppenheimer notes. “But at these valuations, there’s not much room for upside either.”

Nomura’s Charlie McElligott calls the current setup “the one scenario nobody wanted.” Investors were forced to dump stocks when tariff risks blew up in April. Now, many are reluctantly buying back in to chase the rally they missed.

Trading the Pain
Evidence of this whipsaw behavior is showing up in options markets, where traders are “holding their nose” and piling back in despite hating the broader macro outlook.

Historically, bear market rallies last about 44 days and offer average gains of 14%. Right now, we’re already up 18% from the April 7 low—so the window for further gains may be narrowing fast.

Behind the Curtain: Flows and FOMO
Goldman notes that systematic funds—those driven by algorithms—bought $51 billion in stocks last week and could add $57 billion more this week. Retail investors, meanwhile, just had their strongest month of buying since 2017, diving into both single stocks and ETFs.

Hedge fund leverage is also peaking, hitting the 96th percentile based on long-term data, while JPMorgan’s positioning monitor sits in neutral—suggesting limited room to move higher.

Bottom Line
​Markets might look like they’re rebounding, but this rally could be more illusion than lifeline. With risks still looming, headline volatility surging, and investors forced into uncomfortable trades, the smart money isn’t celebrating—it’s bracing.