Key Takeaways
- • Goldman Sachs' trading desk projects trend-following funds (CTAs) will sell approximately $70 billion in global equities this week, with potential sales reaching $98 billion over the following month depending on market conditions.
- • Despite holding a $31 billion short position in U.S. equities, CTAs maintain a $16.5 billion long position in global equities, indicating the majority of anticipated selling will occur in non-U.S. markets.
- • According to Cullen Morgan, equity derivatives trading specialist at Goldman Sachs, most selling pressure from major indices has already been realized for CTAs, while volatility-based investors continue to drive U.S. market pressure.
- • If forecasts materialize, the trend-following community is expected to rebalance to approximately $60 billion short in global equities, creating a sustained headwind for equity markets.
Summary
Commodity trading advisors (CTAs) and other trend-following funds face sustained pressure to continue liquidating equity positions over the coming month, according to Goldman Sachs' trading desk analysis. The forecast carries significant implications for global equity markets, as these systematic funds operate on momentum-based algorithms that mechanistically sell into weakness regardless of fundamental valuations.
Goldman Sachs estimates CTAs will execute roughly $70 billion in stock sales during the current week alone, with potential escalation to $98 billion over the subsequent month contingent on continued market deterioration. The positioning data reveals an important geographic split: while CTAs are already short $31 billion in U.S. equities, they maintain a $16.5 billion long position in global equities ex-U.S. This asymmetry suggests that the bulk of expected selling pressure will manifest outside American markets, where major index deleveraging has not yet fully cleared.
Cullen Morgan, Goldman's equity derivatives trading specialist, notes that selling flows related to major U.S. indices have largely been exhausted for the CTA community, whereas volatility-based investors continue to apply downward pressure on domestic equities. The structural rebalancing process, if it unfolds as projected, will force the trend-following community into a $60 billion net short position in global equities—a material shift that could create a persistent drag on international equity valuations.
This flow dynamic represents a mechanical force independent of company fundamentals or earnings expectations, making it a critical variable for portfolio managers monitoring systematic selling pressures in coming weeks.
Goldman Sachs estimates CTAs will execute roughly $70 billion in stock sales during the current week alone, with potential escalation to $98 billion over the subsequent month contingent on continued market deterioration. The positioning data reveals an important geographic split: while CTAs are already short $31 billion in U.S. equities, they maintain a $16.5 billion long position in global equities ex-U.S. This asymmetry suggests that the bulk of expected selling pressure will manifest outside American markets, where major index deleveraging has not yet fully cleared.
Cullen Morgan, Goldman's equity derivatives trading specialist, notes that selling flows related to major U.S. indices have largely been exhausted for the CTA community, whereas volatility-based investors continue to apply downward pressure on domestic equities. The structural rebalancing process, if it unfolds as projected, will force the trend-following community into a $60 billion net short position in global equities—a material shift that could create a persistent drag on international equity valuations.
This flow dynamic represents a mechanical force independent of company fundamentals or earnings expectations, making it a critical variable for portfolio managers monitoring systematic selling pressures in coming weeks.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.