Goldman Sachs has issued a warning that the recent sell-off in U.S. equities may not be over, as systematic trend-following funds, specifically Commodity Trading Advisors (CTAs), continue to trigger automatic selling signals. This comes despite a powerful rally on February 6 that pushed the Dow Jones Industrial Average above 50,000 for the first time.
According to analysis from Goldman's trading desk, CTA positioning suggests significant forced selling could still hit the market. The bank outlined specific scenarios: if markets resume falling between February 9–13, CTAs could sell around $33 billion in U.S. equities. Over the next month, total systematic selling could reach $80 billion if the S&P 500 drops below the key medium-term trigger level of 6,707. Even in a flat market scenario, models imply about $15.4 billion in selling this week as positions reset.
The S&P 500 ended the week at 6,932.30, not far from its worst weekly performance since October. Goldman strategists have identified the 6,707 level as a "danger zone" where systematic de-risking could accelerate. The initial market weakness was reportedly sparked by a rotation out of AI-heavy technology stocks following the release of a new legal AI tool by Anthropic, which raised competitive disruption concerns.
Concurrently, retail participation showed signs of strain, with roughly $690 million in net selling last week, particularly across crypto-linked equities. This environment of forced, mechanical selling in traditional markets has ignited discussions about potential spillover effects into the cryptocurrency sector, particularly impacting Bitcoin's liquidity and volatility. The news clarifies that earlier, more extreme claims of a $3.5 trillion market warning from Goldman Sachs were unsubstantiated and lacked official confirmation.
Despite the near-term caution due to CTA-driven pressure, Goldman Sachs Global Investment Research maintains a longer-term constructive outlook, projecting a year-end target of 7,600 for the S&P 500, implying roughly a 12% total return for 2026. This outlook is supported by expectations of 2.6% U.S. GDP growth and potential Federal Reserve rate cuts later in the year.
