Buyers' fatigue is sweeping over the US stock market! The exhaustion of good news may trigger short-term intense selling.

As institutional and retail investors retreat from their previously strong bullish positions, the incredibly strong upward momentum of the US stock market since its April low and the recent record highs of the "bull market trend" seem to be facing significant risks. According to RBC Capital Markets, a major investment firm on Wall Street, the US stock market appears to be facing a major challenge of "buyer fatigue," with short-term downward risks escalating, especially the need to be vigilant about selling triggered by "good news exhaustion." Similarly, another Wall Street financial giant, JPMorgan Chase, also suggests that if the Federal Reserve announces a rate cut on September 17 as expected, the positive news that the market has already digested could instead lead to profit-taking by investors and temporary exits from long positions in US stocks. JPMorgan Chase's global market intelligence chief, Andrew Tyler, emphasizes that the expected rate cut by the Federal Reserve in September could put the brakes on the booming bull market in US stocks. Since the beginning of this year, the S&P 500 index has hit more than 20 historical highs, rebounding by over 30% since the April low, demonstrating strong resilience among US stock investors so far. However, as the impact of tariffs on prices begins to show, coupled with recent extremely weak job data fueling recession expectations and the continued threat to the Fed's FOMC monetary policy independence by the Trump administration, investors are on edge ahead of the Fed's interest rate decisions. RBC's cautious logic: buyer fatigue According to RBC's compiled statistics, the inflow of funds into US equity funds has been relatively weak compared to the beginning of the year, although it has managed to return to positive territory. At the same time, flows from US and European investors into US and non-US registered equity funds have started to weaken, and even though global funds excluding the US market are positive, they are also showing signs of deterioration. "When we look further out, we believe this indicates clear signs of buyer fatigue," wrote Lori Calvasina, head of US stock strategy research at RBC Capital Markets, in a report to clients on Monday. Calvasina's concerns are focused on overall high stock valuations, cooling bullish sentiment, and seasonal weakness - historically, September has been the worst month for the S&P 500 index in terms of annual returns. "More importantly, within US equity funds, retail money flow has recently waned," added Calvasina. Specifically, according to RBC's statistics, passive money flows from retail investors into US equity funds are turning negative, reversing the previous strong inflows. In recent years, Wall Street financial giants have been paying closer attention to the behavior of retail investors and statistics on retail fund flows, as this group has been a key driving force behind the so-called "meme stocks" and broader market rallies in recent years. It is precisely the sustained buying wave of global retail investors that has significantly boosted the S&P 500 index to rebound from the intense selling triggered by Trump's tariff policy in early April and hit historical highs multiple times. A stock overall positioning indicator from Deutsche Bank has retreated in the past three weeks but remains slightly above the "neutral" benchmark. Professional portfolio managers have slightly underweighted their positions compared to the previous "neutral" levels. The Deutsche Bank strategy team wrote in a report on Monday that "quantitative fast money" - commodity trading advisors (CTAs) who are adept at using systematic strategy to trade derivatives - significantly reduced their long positions in US stocks last week, especially in the S&P 500 and Nasdaq 100 indexes. After falling on Friday due to weaker-than-expected non-farm payroll data report, US stocks rose on Monday. With traders collectively betting on a rate cut by the Fed next week, the S&P 500 index rose 0.2% to 6,495.15 points, coming within a few points of its record high closing of 6,502.50 points set on Thursday. However, investment firms including RBC and JPMorgan Chase have recently warned that the Fed's monetary policy decision on Wednesday may turn into a significant event of "selling the news," with investors potentially selling stocks after the central bank announces its policy path. JPMorgan Chase's global market intelligence team pointed out that retail investor participation usually declines in September. At the same time, JPMorgan Chase emphasized that the number of large companies conducting stock buybacks during the quiet period before the release of third-quarter earnings reports will also decrease - and large-scale stock buybacks by tech giants like Apple and Meta have been key support for this round of the US stock bull market. The options market is also warning investors to remain cautious, especially towards overvalued large tech giants. The options market is signaling concerns about this strong uptrend, at least in the short term. Last week, the five-day average of the net total volume of bullish options giving investors the right to buy underlying stocks saw a decline. Deutsche Bank strategist Thatte added that this indicator (calculated by subtracting the volume of put options from call options) declined primarily driven by a drop in a single stock contract, with related volume falling to the lowest point in a month. It is worth noting that compared to small-cap stocks, investors are becoming increasingly bearish on the US market's large-cap stocks, especially tech giants whose valuations have reached historic highs. According to statistics from Cboe Global Markets, the so-called "skew" tracking ETFs for the S&P 500 and Nasdaq 100 indexes has become steeper in the options market, while the same indicator for ETFs tracking small-cap benchmarks like the Russell 2000 index is trending flat, indicating traders generally perceive greater downside risks for mega-cap stocks like Nvidia, Microsoft, and Tesla. "As market hedging demand increases, skew is indeed continuing to steepen," wrote Mandy Xu, head of derivatives market intelligence at Cboe, on Monday.