Goldman Sachs: Stock Sell-off Expected to Reach $40 Billion Next Week

On November 21st, Goldman Sachs informed clients in a note that the S&P 500 index has dipped below a closely monitored level. This has provided a green light to trend-following hedge funds that trade stocks based on market trends. These funds may sell approximately $40 billion worth of stocks in the coming week. The S&P 500 index fell below 6725 points on Wednesday. Later that day, in a note to clients, Goldman Sachs stated that trend-following hedge funds view this threshold as a signal to either liquidate their positions or increase their short positions in anticipation of further stock declines. According to Goldman's calculations, after the stock price drops below this number, around $39 billion worth of global stocks may be sold in the subsequent week. If the stock price continues to decline, the bank estimates that systematic trend-following hedge funds could sell up to approximately $65 billion worth of stocks. Trend-following hedge funds seek to capitalize on market trend signals at their outset, whether they are upward or downward. These signals can be derived from trading volume in the market, price levels, or the rate of change in asset prices during a trading day. Goldman's report indicated that before the stock sell-off commenced, these hedge funds held a long position of approximately $150 billion in global stocks. Goldman mentioned that the last time stock prices fell below these closely watched levels was in October. Prior to that, on April 2nd, US President Trump announced a series of tariff proposals. (Jinse Finance)