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<Research>G Sachs: US Stocks Still Subject to Trend-following Fund Sell-offs This Wk
Last Friday (6th), the US stock market rebounded, almost erasing mid-week losses, Goldman Sachs said. However, as the S&P 500 has fallen below its short-term support level, it ...
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<Research>G Sachs: US Stocks Still Subject to Trend-following Fund Sell-offs This Wk
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Last Friday (6th), the US stock market rebounded, almost erasing mid-week losses, Goldman Sachs said. However, as the S&P 500 has fallen below its short-term support level, it will trigger trend-following funds, such as those managed by hedge funds and other institutions, to sell stocks.

Regardless of the market direction, these funds, which track market trends rather than fundamental factors, will continue to be net sellers in the coming week.

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If the equity market declines again, approx. US$33 billion in sell-offs could be triggered this week, Goldman Sachs added. If the pressure persists and the S&P 500 falls below 6,707, up to US$80 billion of additional systematic sell-offs could occur over the next month.

In a flat market, it is expected that funds will sell about US$15.4 billion of US equities this week; and even if the stock market rises, the funds are expected to reduce holdings by approx. US$8.7 billion.

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