Is the negative pressure on the US stock market nearing its end?
Recently, we have been witnessing a significant development unfolding behind the scenes in the US stock market.
CTA funds, which are funds managed by algorithms that trade based on price trends, sold US stocks to the tune of $85 billion in the last 30 trading days.
To understand the magnitude of this move, this is the largest sale since the outbreak of the COVID-19 pandemic in 2020, when sales totaled $105 billion.
This is even higher than the correction we experienced in March-April 2025, during which $190 billion worth of stocks were sold.
Currently, these funds are in a short position, meaning they have a net selling balance and are betting against the market, to the tune of $50 billion.
This is the third-highest figure since 2019, with only the lows of April 2025 and November 2023 being higher.
When delving into the data and examining it by segmentation, these algorithm funds sold $85 billion worth of US stocks and moved to a net short position on the US market worth $37 billion.
This sudden change also altered future plans, and according to data we received from Goldman Sachs:
Currently, no matter what happens in the market in the coming month, momentum-following CTA funds are expected to buy stocks.
This could generate a 'relief rally' in the market and price increases as a result of closing those short positions.
But before becoming overly optimistic,
It's worth remembering that CTAs are only one piece of the automated trading puzzle, and there are other forces currently acting as a drag on the market:
Volatility Control funds, whose role is to manage equity exposure according to market volatility levels.
These funds hold an exposure of $170 billion, which is double the size of CTA funds.
These funds, along with risk-balancing Risk Parity funds, currently represent a significant headwind that is holding back the market and limiting its ability to break higher.
It is important to understand that systematic trading is composed of many layers,
and although CTAs may stop selling stocks, the larger forces still pose a barrier to further gains in the short term.
(We have attached all the data for you.)
We are monitoring the situation and will continue to update.