Quantitative trend-following funds (CTAs) are returning to the US stock market at an unprecedented historical pace, becoming the core driver of recent US equity rebounds.
According to the latest analysis by Goldman Sachs strategist Brian Garrett, CTAs purchased $86 billion worth of US stocks over the past five trading days, ranking among the top five in history and constituting &#34;one of the largest buy volumes ever recorded.&#34;
More noteworthy is that models from Goldman Sachs futures strategists indicate that even if market trends remain flat, this group will add approximately $70 billion in purchases over the next five trading days. Meanwhile, the skew of S&amp;P 500 index call options has risen significantly, signaling that institutional investors are accelerating their follow-through.
Historical backtesting data shows that under similar scenarios of accelerating CTA demand, the S&amp;P 500 Index often experiences short-term consolidation but demonstrates strong medium-term performance—with average returns of approximately +2.19% over one month and +8.18% over three months. Garrett notes that the &#34;Stock Selection Yearbook&#34; suggests potential short-term digestion pressure, but the medium-term trend remains bullish.
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<h2>Short Covering Triggers Buying Wave</h2>
The trigger for this large-scale CTA buying was the trend reversal in risk assets in early April. As previously reported, CTAs accumulated significant short positions near the market low on March 29, only to encounter a historic short squeeze, forcing them to cover on a massive scale.
Brian Garrett of Goldman Sachs pointed out that since risk assets bottomed and rebounded in early April, the demand dynamics for CTAs and systematic strategies have been well-documented; across various market scenarios, this group has maintained a &#34;buy&#34; stance. This means that regardless of whether the market rises or falls, model-driven buy orders will continue to execute.
The speed of global stock purchases over the past week ranks among the top five in history. The single-week purchase volume of $86 billion not only reflects the scale of short covering but also highlights the concentrated entry of systematic capital following a flip in trend signals.
<h2>Next Five Days: $70 Billion in &#34;Passive&#34; Buying Orders Awaiting Entry</h2>
Goldman Sachs futures strategists' models predict that over the next five trading days, the CTA group will purchase another $70 billion under a baseline scenario where &#34;market trends remain flat.&#34; This figure is particularly critical—it implies that even without new positive catalysts, systematic buying orders will continue to provide support to the market.
Garrett specifically noted that CTAs typically execute purchases using VWAP (Volume Weighted Average Price), a characteristic clearly evident in recent markets—in trading days lacking major news, the S&amp;P 500 Index still exhibited a continuous, stable, slow upward trend, which is a typical imprint of mechanical CTA buying.
This systemic characteristic of &#34;being buyers regardless of price direction&#34; means that short-term downside risks are buffered to some extent, though vigilance is required against potential reverse shocks should trend signals flip again.
<h2>Historical Precedents: Short-Term Volatility, Medium-Term Gains</h2>
Goldman Sachs reviewed three historical cases of accelerating CTA demand to assess current market prospects.
On September 16, 2019, the S&amp;P 500 Index fell 0.71% over the following two weeks and 0.28% over one month, but rose 6.46% after three months; on November 17, 2023, the index gained 1.79%, 4.54%, and 10.89% over two weeks, one month, and three months respectively; on August 26, 2024, the index dropped 2.60% within two weeks but rose 2.29% and 7.21% after one and three months respectively.
Aggregating these three cases, the average return over one month was approximately +2.19%, and over three months approximately +8.18%. Based on this, Garrett concluded: after CTA demand accelerates, the market faces short-term digestion pressure, but medium-term performance has historically been robust.
Beyond CTAs, broader institutional capital is also entering the market. According to Goldman Sachs data, the skew of S&amp;P 500 call options has risen sharply in tandem with the rebound in risk assets, indicating that market participants are actively positioning for upside exposure—not just retail investors or systematic strategies driving this rally.
The strengthening of call option skew is typically viewed as a signal of institutional optimism about future market directions, suggesting that market sentiment has shifted from defense to offense. This change resonates with the large-scale CTA buying, further reinforcing the recent rebound momentum in US equities.

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New data from Goldman Sachs reveals that quantitative CTA funds purchased $86 billion worth of US stocks over the past five trading days, marking one of the largest buy volumes in history. More remarkably, even if the market remains flat over the next five days, approximately $70 billion in 'passive' buying orders remain queued to enter. Historical backtesting shows that under similar conditions, the S&P 500 Index averaged a gain of 8.18% over three months, while institutional capital has accelerated its follow-through—this systemic buying wave may be reshaping the mid-term trajectory of US equities

- Quantitative Trend-Following Funds (CTA) are rapidly returning to the U.S. stock market, significantly driving recent market rebounds.  
- In the past five trading days, CTAs purchased $86 billion in U.S. equities, marking one of the largest buying spurts in history, with expectations of an additional $70 billion in the coming days.  
- Historical data suggests that while short-term fluctuations may occur, mid-term performance tends to be strong, averaging returns of +2.19% over one month and +8.18% over three months following similar increased demand from CTAs.

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CTA Epic Short Covering in US Stocks: $86 Billion Purchased in One Week, Another $70 Billion Expected Next Week