The driving forces behind nine consecutive weeks of gains in U.S. stocks: retail investors staying in the market, continuous buybacks, and ongoing CTA purchases

```

The S&P 500 Index has risen for nine consecutive weeks, with a cumulative gain of 5% in May, and is expected to extend to a tenth week—this would mark the longest streak of gains since 1985.

Amidst mounting concerns such as geopolitical tensions, private credit risks, and AI impacting the labor market, U.S. stocks continue to hit record highs. Where exactly does the driving force come from?

Goldman Sachs' latest analysis of market fund flows and positions provides the answer: institutional investors overall remain relatively calm, and the true support for the market comes from three forces—relentless retail buying, robust corporate buybacks, and moderate CTA (Commodity Trading Advisor) accumulation. Goldman data show these three types of buyers pay little heed to valuation and concentration risks, providing stable support for equities.

Meanwhile, Goldman’s risk appetite indicator has risen to an all-time high of 1.13, while the volatility fear index has dropped near a record low. Market sentiment may not be euphoric, but the willingness to go long is extremely strong and rare.

Hedge Funds: Leverage at record highs, but not the main driver

Goldman’s prime brokerage data shows that overall gross leverage of hedge funds has increased by 2.1 percentage points to 322.9%, a five-year high; net leverage is up to 80.9%, in the 85th percentile over the past year. Net leverage for fundamental long/short funds has climbed to 59.8%, in the 99th percentile over the past year.

Trade direction data show global equity net buying at +0.7 standard deviation over the past year, with nearly all buying from long additions. North America and emerging market Asia have the largest net purchases; financials, consumer discretionary, and healthcare sectors saw the most buying, while information technology, consumer staples, and communication services saw net selling.

Notably, the technology sector saw its largest position reduction in over a month, mainly driven by long sales, yet the sector's gross and net positions in global prime brokerage books remain at five-year highs. In Europe, risk appetite inflows have appeared for five straight weeks, yet overall European books are still net sellers, with new shorts exceeding long sales at a 1.5:1 ratio.

Despite high hedge fund leverage, overall institutional activity is below what market moves might suggest—implying the main market drivers are elsewhere.

Retail Investors: Persistent participation, neutral sentiment

Goldman characterizes retail fund flows as "relentlessly positive"—participation cooled slightly last Friday, but overall buying bias remains unchanged.

From a sentiment indicator perspective, for the week ending May 27, the American Association of Individual Investors (AAII) survey showed the bullish ratio rose 3.9 percentage points to 35.6%, the bearish ratio fell 1.7 percentage points to 41.9%, and neutral fell to 22.6%. Compared to the historical averages (bullish 37.5%, bearish 31%, neutral 31.5%), bearishness is still notably high, keeping overall sentiment neutral.

The latest reading from the CNN Fear & Greed Index is 59/100, essentially flat from last week's 58, still in "greed" territory. Goldman's U.S. equity sentiment gauge slipped slightly this week to +0.2, also neutral.

This combination means retail investors are not irrationally exuberant, but their buying is steady and persistent, providing important foundational support to the market.

Corporate Buybacks: Full throttle, with tech and financials leading

Data from U.S. buyback desks shows that, for the week ending May 29, 2026, open market buyback execution momentum remains strong, with traded volume 1.9 times the average since the beginning of 2025, and double the same period in 2024, concentrated in technology, financials, and consumer discretionary sectors.

In North America, IPO and secondary offerings this week totaled $9.45 billion, year-to-date cumulative $225.54 billion, suggesting limited supply-side pressure.

Goldman’s buyback desk also notes that with the Q2 blackout period approaching (expected to start mid-June), firms are rapidly shifting to 10b5-1 plans to maintain execution continuity during blackout windows. Currently, discretionary open market orders account for about 40% of total flows; blackout periods typically reduce desk volumes by about 30%. This suggests buyback support for the market may experience a temporary dip in the coming weeks.

CTAs: Moderate buying, key trigger levels to watch

Goldman’s models estimate that CTAs moderately increased equity exposure globally last week, with current global equity long positions around $93 billion, in the 62.3rd percentile for the past year.

Looking ahead, the model predicts that CTAs will continue moderate buying over the next five days and one month. Specifically, in a flat market scenario, net buying of $553 million is expected over the next week; in a rising scenario, net buying of $725 million; only in a falling scenario would there be net selling of $26 million.

Looking out one month, net selling could surge to $100.4 billion in a down market—showing the CTA strategy's asymmetric risk: moderate buying when following the trend, but significant selling should the trend reverse.

Goldman highlights the following S&P 500 trigger levels: short term at 7,232, medium term at 6,965, and long term at 6,564. Investors should closely monitor these.

Market Makers & Risk Indicators: Buffer exists, but not foolproof

Market maker Gamma is currently positive, marginally above $4 billion, giving the market an extra "melt-up" buffer—positive Gamma means market makers tend to buy into market drops and sell into rallies, helping dampen volatility.

However, if the market moves unidirectionally by 4%, Gamma will turn deeply negative, and market maker hedging could amplify volatility instead.

From a macro risk preference perspective, Goldman's risk appetite index has reached 1.13, a record high, while its volatility fear index dropped to 1.38—near an all-time low, and down sharply from over 9 a few weeks ago. Implied correlation for the S&P 500 is also at all-time lows, reflecting extreme optimism for diversification among individual stocks.

The "Wall of Worry" remains, with data windows approaching

Although several forces are supporting the market, Goldman cautions investors to beware of the existing "wall of worry" and sharp factor volatility.

Upcoming macro and micro data windows to watch include: ISM manufacturing and services indices, JOLTS job openings, non-farm payrolls, and further earnings reports from consumer and TMT sectors.

At the mutual fund level, for the week ending May 27, global equity funds saw net outflows (-$7 billion, vs. +$2 billion prior). U.S. equity funds still saw demand, but European, Japanese, and Mainland China funds had net outflows. For the week ending May 26, institutions were slight net sellers of S&P futures, but non-dealer net longs still exceeded $250 billion, near historic highs.

Risk warning and disclaimerThe market carries risks, investment should be cautious. This article does not constitute individual investment advice and has not taken into account specific investment objectives, financial situations, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article are suited to their circumstances. Invest at your own risk. ```