Trend-following hedge funds may trigger significant equity selling in the coming week after the S&P 500 fell below a key technical threshold, according to a report by Bloomberg citing a recent client note from Goldman Sachs.
The S&P 500 dropped past 6,725 on Wednesday, closing at 6,642, activating signals that systematic trend hedge funds monitor to either reduce long positions or increase short exposure. Goldman estimates these funds could sell around $39bn of global equities over the next week. If declines continue, potential selling could rise to roughly $65bn.
Before the recent pullback, such funds held approximately $150bn in long equity positions. Their strategies rely on market signals – including price levels, trading volume, and intraday momentum – to capitalise on both upswings and downturns.
Goldman highlighted that the last comparable technical breach occurred in October, with a previous major trigger in April following US tariff announcements.
