For Traders from Club iNSIDER: CTAs change the strategy. Short globally, long in the US

According to Goldman Sachs’ trading department, this week CTA (Commodity Trading Advisors) is expected to buy U.S. stocks and sell global stocks, regardless of market movement.

This group currently holds short positions worth $55 billion in global stocks and $31 billion in U.S. stocks. The sharp reduction in exposure to the U.S. suggests that these systematic strategies will be buying in this region. Goldman traders estimate that CTA will sell between $10 billion and $24 billion in stocks this week, but will buy between $3 billion and $7.4 billion in the S&P 500 over the same period, depending on market movement.

“The systematic exposure to global stocks is approaching historically low or short levels,” says equity derivatives trader Cullen Morgan. “Over the next week and month, we expect them to be buyers of U.S. stocks in any scenario.”

The higher weighting of technology stocks in the S&P 500 index leads to increased realized volatility compared to an equally weighted version of the index, reaching its highest levels since 2001, according to derivatives analysts from Cboe, led by Mandy Su. The exchange operator started trading options on the equally weighted index this week, the team writes in a note.

The technology sector is also in focus globally as the Donald Trump administration continues with its plans to impose tariffs on semiconductor imports by launching trade investigations. Investors will be looking for signs of the potential impact of the trade war as the earnings season ramps up, with Dutch chip equipment maker ASML set to report results on Wednesday. Tesla will be the first of the “Magnificent Seven” to report earnings this season—on April 22.

The performance of hedge funds remains relatively stable, despite their trading activity reaching extreme levels last week, according to JPMorgan Market Intelligence.

Hedge fund turnover—measured as volume relative to exposure—spiked alongside volatility in the U.S., with Wednesday being one of the largest net-buy days recorded since 2018, according to the trading team.

Meanwhile, the positioning of CTA in the U.S. stock market has dropped to the 7th percentile—the lowest level since early 2023. Nevertheless, it remains well above the lowest levels seen around the third quarter of 2022, just before the S&P 500 emerged from its last bear market.

As for retail investors in the U.S., they “continue to swim against the tide,” the note says, aggressively buying stocks of individual companies and ETFs from Tuesday to Thursday after the strongest month of buying in history recorded in March.

Deutsche Bank Global’s Chief Investment Officer says that the asset manager will “buy the dip” on the U.S. market if the S&P 500 index approaches its “recessionary threshold” of 5000 points, which is 7.5% below Monday’s close.

“Whenever we see levels below 5000, 4800, we think that this is more of a buying opportunity,” says Christian Nolling in an interview with Bloomberg TV.

“There is still significant growth potential in the U.S.—and this remains attractive to investors.”

“We reduced our exposure to U.S. stocks a little before the tariffs, but also told clients not to panic due to volatility.”