According to the Zhitong Finance APP, Goldman Sachs' trading department stated that the current positioning structure of hedge funds in the U.S. stock market may create conditions for a strong rebound in U.S. stocks after recent fluctuations. Data shows that while speculative funds maintain long positions in individual stocks, they have established a large amount of short hedges through exchange-traded funds (ETFs) and stock index futures, with the scale of these shorts currently reaching the highest level since September 2022.
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Data from Goldman Sachs' chief brokerage team indicates that hedge funds overall still maintain a bullish stance on individual stocks, but are continuously increasing their hedging efforts at the macro level. John Flood, head of U.S. equity execution services and partner at Goldman Sachs, stated that this &#34;long stocks, short index&#34; structure reflects the market's response to multiple uncertainties, including conflicts in the Middle East, concerns in the credit market, and doubts surrounding the investment cycle in artificial intelligence.
However, this structure also means that if positive news emerges, investors may be forced to quickly cover their previously established short hedges, thereby driving a rapid increase in the index. Flood mentioned in an interview that if significant news announcing the end of the conflict occurs, a noticeable rebound in the index could happen. &#34;The market could rise 2% to 3% in a short period, with a large portion of the increase coming from the short covering of macro products.&#34;
Data shows that the total exposure of hedge funds has reached approximately 307%, close to historical highs. This metric measures the total value of long and short positions. Flood pointed out that in the current environment, the &#34;right tail risk&#34; of the market breaking upward is actually higher than the downside risk. &#34;Due to the overall large position size and the significant increase in short positions in macro products, any positive news could trigger aggressive covering rallies.&#34;
This past Monday, the market briefly exhibited a similar trend. After U.S. President Trump stated that the war with Iran could be &#34;resolved soon,&#34; the S&amp;P 500 index, which had fallen 1.5% during the day, ultimately closed up 0.8%. Traders generally believe that this reversal partly stemmed from investors covering their previously established short positions. Nevertheless, the S&amp;P 500 index is still about 3% lower than its historical peak, while many individual stocks have seen even more significant declines.
The turbulent market environment has already impacted some investors. Goldman Sachs data shows that due to rapid rotations between industry sectors, fundamental long-short hedge funds have experienced a return drawdown of about 4% year-to-date.
Meanwhile, other types of institutional investors remain on the sidelines. Flood stated that long-term funds, including traditional asset management companies and sovereign wealth funds, are currently in a phase of waiting for clearer signals.
&#34;Since the beginning of this year, long-term investors have performed well until the outbreak of the Middle East conflict,&#34; Flood said. &#34;In the face of rising macro uncertainty and increased market volatility, many institutions are now choosing to wait and see.&#34;
Corporate buybacks provide certain support to the market. Goldman Sachs' corporate buyback trading department stated that the activity of corporate stock buybacks reached one of the highest levels in three years last week, with many companies increasing their buyback efforts in response to recent stock price corrections.
Retail investors remain an important source of demand in the stock market, but if the job market weakens significantly, this portion of funds may decrease. Flood pointed out that if multiple negative employment data points emerge in the future, the market may worry about retail funds withdrawing, leading to a decline in the stock market. However, he believes that a single weak employment report is insufficient to change the current market landscape.
Looking ahead to the coming weeks, Goldman Sachs believes that market volatility may further intensify. Although the average daily trading volume has exceeded 20 billion shares this year, market liquidity depth has significantly decreased. Goldman Sachs estimates that the current tradable scale of S&amp;P 500 futures at the best bid and ask prices is about $4 million, far below the historical average of about $14 million. Typically, when this indicator falls below $7 million, it indicates that market liquidity pressure is beginning to rise.
Flood stated that this means that large institutions will have a significantly amplified impact on prices when conducting large transactions.
As for the ultimate market trend, it largely depends on the development of geopolitical situations. Flood noted that investors generally expect signs of easing in the Middle East conflict within the next two weeks. If the conflict lasts longer without positive progress, stock market indices may face new pressures

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Goldman Sachs stated that the positioning structure of hedge funds in the U.S. stock market may create conditions for a rebound in U.S. stocks. The current short positions have risen to the highest level since September 2022, although hedge funds are still looking at multiple stocks, they are increasing their hedging efforts at the macro level. Goldman Sachs pointed out that if positive news emerges, investors may quickly cover their shorts, driving the index up. The market's "right tail risk" is higher than the downside risk, which could lead to a short-term increase of 2% to 3%

- Goldman Sachs reports that the current hedge fund positioning in the U.S. stock market could lead to a strong rebound after recent volatility.  
- Data shows a significant increase in short hedges through ETFs and futures since September 2022, although hedge funds remain bullish on individual stocks.  
- The ongoing geopolitical uncertainties, including the Middle East conflict, may affect market dynamics, and a positive news event could trigger a rapid index recovery, driven by covering of shorts.

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Goldman Sachs: The scale of macro product short positions has reached a high since the end of 2022, and positive news may trigger a rapid rebound in U.S. stocks