Goldman Sachs Warns That the Equity Selloff Is Far From Over

Quick overview

According to the Wall Street bank, Commodity Trading Advisers (CTAs) have already triggered sell signals following the recent break of key technical levels in the S&P 500.

Goldman Sachs traders issued a warning to markets: the equity selloff is not over, even after the recent rebound on Wall Street. The alert focuses on the behavior of systematic funds and automated strategies that could generate significant additional selling flows in the coming days and weeks—regardless of whether prices move higher or lower.

According to Goldman Sachs’ trading desk, Commodity Trading Advisers (CTAs)—funds that follow price trends rather than economic fundamentals—have already activated sell signals after the S&P 500 broke below key technical levels.

This suggests that these algorithms could continue unwinding positions over the coming week, adding pressure to a market that has already shown elevated volatility.

Goldman Sachs’ Equity Flow Projections

The Wall Street bank projects that if the S&P 500 continues to decline, selling pressure could trigger roughly $33 billion in equity sales this week alone. If the index falls below a critical level (around 6,707 points), those flows could expand significantly, reaching up to $80 billion over the next month.

Even in a scenario where prices remain relatively flat, Goldman’s models estimate that CTAs could offload about $15.4 billion in equities this week. And if markets rise, selling would still be meaningful—around $8.7 billion—as many funds mechanically rebalance positions.

This dynamic is being amplified by thinner market liquidity, with indicators showing reduced depth at the “top of book” (the closest bid and ask orders), which can magnify price swings when large sell flows hit the market.

Key Technical Dynamics

The behavior of these systematic funds is not driven by economic news or fundamentals such as corporate earnings or growth prospects. Instead, they respond directly to technical levels and price trends, which can trigger cascade selling during sharp market moves.

Beyond CTAs, other automated strategies—such as risk-parity and volatility-control funds—also have the capacity to sell equities in response to technical shifts and their own algorithmic frameworks, potentially intensifying overall selling pressure in the coming sessions.

Goldman’s warning follows a week of heightened volatility, in which the S&P 500 and Nasdaq posted sharp swings and investors grew increasingly nervous about market direction in February—a month that is traditionally weaker for equity performance.

ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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