Goldman Sachs warns! Violent rebound of US stocks hit new highs, hedge funds take the opportunity to heavily sell off.

Goldman Sachs Group's bulk brokerage trader revealed that hedge funds are reducing their risk positions as the US stock market continues to rise. Analysis from the Goldman Sachs team led by Vincent Lin shows that hedge funds have cut the overall size of their long and short positions in stocks by the largest amount since September last year, as the S&P 500 index rebounded rapidly last week and hit a new all-time high. In a report to clients, they stated, "Last week, the total leverage ratio of long and short strategies in the US stock market decreased by 4.6 percentage points, due to the largest drop in nominal total positions in seven months, with the closure of individual stock risk positions being the main driver." Hedge funds are reducing their US stock positions From a technical perspective, the S&P 500 index has recently experienced one of the strongest rebounds in history. Using the 14-day relative strength index as a measure, the index quickly moved from oversold territory to overbought territory in just 12 days. The deadlock in US-Iran peace negotiations, combined with a shift in market focus from geopolitical conflicts to strong corporate profit growth, has led some investors to return to the stock market. Systematic strategies relying on algorithms and mathematical models, such as Commodity Trading Advisors (CTAs), have been actively buying stocks, while investors focusing more on fundamental factors seem to lack confidence. Strong rebound in the S&P 500 index Last week, the closure of market risk positions exhibited a widespread trend, with 9 out of 11 sectors showing net selling. Hedge funds have been net sellers of non-essential consumer goods stocks for the seventh consecutive week, with the selling speed reaching its fastest pace in 10 weeks, with almost all sales coming from long positions being closed. The information technology sector has also become a focus for selling, experiencing its largest weekly sell-off since July 2024. This is the third largest sell-off in almost five years, mainly due to the size of long position closures exceeding short position replenishments at a ratio of 1.9:1. Despite the selling last week, the technology sector's holdings remain very high. Currently, the technology sector accounts for 20.6% of the total exposure in the US stock market, ranking in the 92nd percentile over the past year and the 98th percentile over the past five years.