Record Short Positions and Trend Followers Could Fuel Stock Rebound if Selloff Stabilizes
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Wall Street traders have taken on the biggest short position in US stocks on record, shorting $47 billion worth according to Goldman Sachs.
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Trend-following CTAs rely on momentum trading strategies and manage about $350 billion in assets.
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Their large positions can impact stock prices as they quickly flip when trends reverse.
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This extreme bearish positioning has happened at prior market bottoms like March 2020 and late 2018.
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CTAs could fuel a stock rebound if the market continues to show signs of bottoming out.