--- title: "Goldman Sachs Trading Desk: Five Warning Signals Flash as U.S. Stocks Enter the \"Retracement Window After ATH\"" type: "News" locale: "en" url: "https://longbridge.com/en/news/284148053.md" description: "The S&P 500 quietly reached an ATH, yet the Goldman Sachs trading desk simultaneously sounded five alarms: hedge funds executed their largest single-week de-leveraging in seven months; pension plans faced a historic $25 billion sell-off pressure; CTA buying momentum exhausted and turned into potential selling pressure; market breadth on the day of the new high recorded the second-worst performance in history; and sentiment indicators alongside semiconductor gains both entered the \"overbought zone\". Beneath the facade of prosperity, a storm may already be gathering" datetime: "2026-04-27T03:34:30.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/284148053.md) - [en](https://longbridge.com/en/news/284148053.md) - [zh-HK](https://longbridge.com/zh-HK/news/284148053.md) --- # Goldman Sachs Trading Desk: Five Warning Signals Flash as U.S. Stocks Enter the "Retracement Window After ATH" After a volatile April, the S&P 500 quietly returned to its ATH, but internal alerts have been triggered at the Goldman Sachs trading desk. In a weekend report, Goldman Sachs trader John Flood clearly stated that while he believes the S&P 500 will trade significantly higher throughout 2026, five warning signals are currently flashing simultaneously, and the trading desk is preparing for a recent index-level retracement. Meanwhile, another Goldman Sachs trader, Brian Garrett, also documented the abnormal trend of large-scale de-leveraging by hedge funds in his "Weekend Memo" report. However, both traders believe that if a retracement occurs, it should be viewed as a buying opportunity. The timing of this warning is quite delicate—this week will be the busiest of the year, with both the Federal Reserve and the Bank of Japan set to announce interest rate decisions. Approximately 44% of the market capitalization of S&P 500 constituent companies will release earnings this week, including Google, Microsoft, Amazon, and Meta after market close on Wednesday, and Apple after market close on Thursday. ## Signal 1: Hedge Funds Slam on the Brakes, Largest Single-Week De-leveraging in Seven Months According to Goldman Sachs Prime Brokerage data, overall total trading activity last week fell for the first time in 13 weeks, with the notional scale of U.S. stock de-leveraging reaching its largest level since September 2025 (seven months), driven primarily by risk liquidation. By sector, the de-leveraging in Consumer Discretionary and Technology sectors was the most aggressive, marking the third-largest single-week de-leveraging in the past five years. Flood pointed out that this is the first of the five warning signals: **after large-scale covering of macro short hedges, the total leverage ratio has clearly contracted.** Short positions on U.S. listed ETFs decreased again by 1.4% last week, with a cumulative monthly decline of 21.5%; credit, information technology, and small-cap ETF coverings led the way. Garrett described hedge fund net exposures as "relatively restrained, remaining within a +/- 53% range throughout the year," characterizing this as "prudent risk management in a market environment prone to 'unknown unknown' events." ## Signal 2: Month-End Pension Rebalancing Pressure Hits Historic Record The second signal comes from passive selling pressure. Goldman Sachs estimates that **month-end pension rebalancing in April will generate approximately $25 billion in U.S. stock selling demand**, ranking among the top 15 largest estimated sell-offs since 2000. If quarterly maturity factors are excluded (which include both monthly and quarterly rebalancing), this would represent the largest single-month selling estimate in history. In absolute terms, this $25 billion selling scale ranks at the 83rd percentile among all buy-sell estimates over the past three years, and at the 92nd percentile when tracing back to January 2000. Historically comparable non-quarterly selling estimates include: approximately $20 billion each in November and April 2020, approximately $19 billion in May 2025, and approximately $18 billion in October 2022. ## Signal 3: CTA Buying Momentum Exhausted, Turning into Potential Sellers The third signal points to Trend Following Strategies (CTA). Data from Goldman Sachs Futures Trading Desk shows that since April, the CTA group has been the most significant capital force driving global stock market gains, having accumulated purchases of approximately $53 billion in global stocks this month, with net purchases of about $32 billion solely in the S&P 500 (including $23 billion bought last week). **However, this buying momentum plan has come to an end.** Flood noted that this marks the first time in over a month that CTAs were not net buyers of the S&P 500—they slightly leaned towards selling during stable market conditions, which will form more significant supply pressure if the market declines. This means the largest marginal buyer that had been consistently supporting the floor has now "filled up and stepped aside," leaving the market without an important automatic stabilizer. ## Signal 4: Market Breadth Severely Worsened, Hidden Dangers Behind New Highs The fourth signal reveals structural concerns beneath the surface prosperity. Last Friday, the S&P 500 hit a historical closing ATH, yet the market breadth that day recorded the second-worst performance ever when hitting a new high: **324 constituents closed lower, with a net breadth reading of -148.** The only worse record occurred in October 2025, when 80% of S&P 500 constituents declined on the day the index hit a new high. The severe divergence in market breadth indicates that this rally has been highly concentrated in a few heavyweight stocks, while participation across the broader market has shrunk significantly. Such structures have historically been leading indicators of high-level volatility or corrections. ## Signal 5: Sentiment Indicators Enter "Overbought Zone," Semiconductor Rally Triggers Caution The fifth signal comes from Goldman Sachs' U.S. Equity Sentiment Indicator: **investor positioning has shown signs of being "stretched."** From the overall sentiment framework perspective, positioning levels remain relatively elevated. At the same time, Flood specifically highlighted the extreme moves in the semiconductor sector. The Philadelphia Semiconductor Index (SOX) has risen for 18 consecutive trading days, setting a record for the longest streak of gains in history. On Friday's close, it was approximately 50% above its 200-day moving average—the most extreme deviation from the 200-day MA since the bubble peak of 2000 (when SOX was over 100% above its 200-day MA). This trend reflects enhanced market confidence in the correlation between AI computing power consumption and revenue realization, as well as renewed concerns about capacity constraints in the next round of the AI complex. From the derivatives market perspective, S&P 500 gamma positioning is in a rare zone. Market makers are in an extremely net-short gamma state regarding spot breakout directions, meaning that once price breaks in a specific direction, volatility will be significantly amplified. Currently, almost no professional investors hold direct long positions; July call option implied volatility is trading around 12, making long upside plays still a "lonely trade." Although the five warning signals point to a short-term correction, Goldman Sachs still believes the S&P 500 will close significantly higher than current levels in 2026, and any correction should be viewed as a structural buying opportunity. Historical data shows that since the financial crisis, whenever the S&P 500 retests previous highs after experiencing a retracement exceeding 10%, the average returns for the subsequent 1 week, 1 month, and 3 months have been 1.5%, 5.2%, and 8.6%, respectively. ### Related Stocks - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) - [GS-D.US](https://longbridge.com/en/quote/GS-D.US.md) - [GS-A.US](https://longbridge.com/en/quote/GS-A.US.md) - [GS.US](https://longbridge.com/en/quote/GS.US.md) - [GS-C.US](https://longbridge.com/en/quote/GS-C.US.md) - [VOO.US](https://longbridge.com/en/quote/VOO.US.md) - [SDS.US](https://longbridge.com/en/quote/SDS.US.md) - [IVV.US](https://longbridge.com/en/quote/IVV.US.md) - [SPXU.US](https://longbridge.com/en/quote/SPXU.US.md) - [SH.US](https://longbridge.com/en/quote/SH.US.md) - [SPY.US](https://longbridge.com/en/quote/SPY.US.md) - [GOOGL.US](https://longbridge.com/en/quote/GOOGL.US.md) - [GOOG.US](https://longbridge.com/en/quote/GOOG.US.md) - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [AMZN.US](https://longbridge.com/en/quote/AMZN.US.md) - [META.US](https://longbridge.com/en/quote/META.US.md) - [AAPL.US](https://longbridge.com/en/quote/AAPL.US.md) - [W4VR.SG](https://longbridge.com/en/quote/W4VR.SG.md) ## Related News & Research - [Goldman Sachs lifts Siltronic voting rights stake to 5.22% from 4.92%](https://longbridge.com/en/news/284204343.md) - [Largest Hedge Fund Selling In 7 Months](https://longbridge.com/en/news/284120581.md) - [ANALYSIS-Investors return to US stocks as AI, earnings growth feed fear of missing out](https://longbridge.com/en/news/283805570.md) - [The Goldman Sachs Group, Inc. $GS Shares Purchased by Universal Beteiligungs und Servicegesellschaft mbH](https://longbridge.com/en/news/283670868.md) - [Goldman Sachs Remains a Sell on Icade SA (0K4O)](https://longbridge.com/en/news/283546327.md)