Net selling pressure in the US stock market is approaching the peak recorded during the COVID-19 crash. Goldman Sachs: CTAs will shift fully to buying in the next month.

```

The selling pressure in U.S. stocks is approaching historical extremes, but conditions for a rebound are also quietly accumulating.

According to Goldman Sachs Prime Brokerage data, hedge funds have cut global equity holdings for six consecutive weeks, with net sales ranking third over the past decade, nearing peak levels seen during the COVID-19 market crash. At the same time, Goldman analysts note that trend-following system investors (CTAs) have sold about $190 billion in stocks over the past month, currently holding roughly $50 billion in net short positions in global equity markets, but their selling momentum is waning.

Goldman Sachs believes that these extreme positions are creating asymmetric upside potential for the market. The bank estimates that in the next month, CTAs will turn to net buyers regardless of market direction. Meanwhile, quarter-end pension fund rebalancing is expected to enter the market, and about $7 billion in negative Gamma exposure held by options market makers will expire by the end of the month, relieving multiple sources of technical pressure simultaneously.

Hedge fund selling nears "capitulation" signal

In a weekly market data review report ending March 26, Goldman Sachs Prime Brokerage noted that the latest round of hedge fund de-risking was broad-based, with net selling seen across major regions. In Europe, macro product short exposure rose to 11%, a ten-year high.

In the U.S. market, Goldman's team said in a separate report that "signs of partial capitulation are beginning to emerge," suggesting that hedge fund pessimism toward the market is approaching extreme levels. On a six-week rolling basis, U.S. equity net sales rank third over the past decade, close to the pandemic sell-off, but still below the peak levels triggered by the "Liberation Day" tariffs in April 2025.

From a market performance perspective, what was previously seen as a relatively mild correction is deepening. The Nasdaq 100 index has now fallen more than 10% from its peak, officially entering a technical correction; the S&P 500 is also nearing the same threshold. Since March, the European Stoxx 600 Index has fallen nearly 9%, set for its worst monthly performance in six years.

CTA selling pressure wanes, rebound asymmetry prominent

Changes in systemic investor positioning are another key market variable. Goldman analyst Cullen Morgan noted that CTAs have sold about $190 billion in the past month and currently hold about $50 billion in global equity net shorts, but their selling momentum is fading.

"Systematic investors are running out of ammunition," Morgan wrote. "The asymmetry points upward—we estimate that in any market scenario in the next month, CTAs will be buyers."

Meanwhile, Goldman’s models suggest that pension funds will buy stocks during month- and quarter-end rebalancing. In addition, about $7 billion in negative Gamma exposure by options market makers will expire at month end, thereby automatically removing a technical factor that has been weighing on the market. These multiple factors together form a potential technical rebound base in the short term.

Geopolitics remain the biggest variable, Goldman avoids calling a "bottom"

Despite extreme technical signals, Goldman remains cautious on whether the market has bottomed. Goldman’s Brian Garrett wrote in a client note: "It feels like we’re closer to the end than the beginning, but this game doesn’t have classic ‘rounds’."

Garrett pointed out that no market participants currently have a clear timeline on the Iran war; de-escalation requires consensus from all parties, and there's no clear sign of that yet.

"While, as a sell-side analyst, successfully calling the bottom is enjoyable—and many have already tried—that’s not where we are yet, to be honest," Garrett said.

Goldman's overall view: The unwinding of extreme positioning and technical pressure provides asymmetric upside potential, but a true trend reversal still depends on substantive easing of geopolitical tensions.

Risk Warning and DisclaimerThe market has risks; investment requires caution. This article does not constitute personal investment advice and does not take into account any particular investment objectives, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article suit their specific situation. Investments made accordingly are at one’s own risk. ```