Traders at banking giant Goldman Sachs warn that the sell-off in the S&P 500 is likely to extend after the index tripped a bearish trigger.
Goldman’s trading desk says the S&P 500 has breached a key short-term trigger that prompted Commodity Trading Advisers (CTAs) to dump their holdings, Bloomberg reports.
According to Goldman, CTAs are trend-following algorithmic funds that focus on market direction rather than fundamentals, and a renewed drop could systemically set off a $33 billion sell-off. If the S&P 500 plummets to 6,707, Goldman says the funds could dump as much as $80 billion over the next month.
The bank says that in a flat market, CTAs are projected to unload $15.4 billion in stocks this week. Should the market recover, the funds are expected to sell $8.7 billion in shares.
Goldman also says thin liquidity and options positioning will likely keep the market choppy for now. The traders say the S&P top-of-book liquidity has deteriorated sharply, dropping to $4.1 million from its 2026 average of about $13.7 million. The metric suggests that the cushion has become so thin that prices can widely swing if there aren’t enough orders to absorb trades.
As for options positioning, Goldman says dealers are now flat or short gamma, a condition that could exacerbate wild price swings if order books remain thin.
Say Goldman’s trading desk team members Gail Hafif and Lee Coppersmith,
“The inability to transfer risk quickly lends itself to a choppier intraday tape and delays stabilization in overall price action… Buckle up.”
As of Friday’s close, the S&P 500 is trading at 6,932.
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