Goldman Sachs' chart, which tracks the rolling one-month change in positioning among systematic traders—primarily rule-based funds, including commodity trading advisors (CTAs), that rely on predefined models and algorithmic signals—points to a potential near-term pullback in US stock indices.
By early May 2026, a broad consensus had emerged among Goldman Sachs, JPMorgan, and Bank of America that the prevailing buying impulse in US equities had largely exhausted itself. Goldman Sachs specifically highlights that systematic traders (CTAs) remain positioned at sizable long levels—approximately $32–44 billion net in the S&P 500—but are poised to shift toward neutral or modest selling in flat or declining markets. Should key downside thresholds be breached, this could trigger substantial selling pressure exceeding $50 billion.
Nobody wants puts on the Nasdaq: The put/call ratio has collapsed to its lowest
level since 2023. Near-term mean reversion and price consolidation next?
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US equity market breadth is at one of its lowest levels since the 1980s, reaching near-record lows on a long-term chart from 1985–2025. The latest reading sits far below average and one standard deviation below the mean, signaling extreme narrowness despite repeated new highs in major indices. This is driven by heavy capital concentration in a small number of AI, semiconductor, optics, and memory stocks, which are powering index gains while the vast majority of equities significantly lag.
The S&P 500 just saw the largest call-buying day in history: $2.6T in call volume. Massive call buying forces market makers to hedge by buying stocks, pushing prices higher, triggering more hedging, and fueling a gamma squeeze. It’s powerful on the way up—and vicious on the way down when flows unwind or calls expire. This isn’t fundamentals driving markets anymore. It’s options flow moving the world’s largest index. The question isn’t if it unwinds — it’s when.
ES (daily candles): Expect a pullback or sideways consolidation toward at least the neutral mean (solid black rising line)—the equilibrium point between the premium (overextended upper red) and discount (overextended lower green) zones.
Major banks show broad agreement on resilient 2026 S&P 500 earnings growth driven by AI and the economy, but diverge on the index target due to differing views on valuation multiples. Here is a combined comparison table of their latest 2026 forecasts (as of late April 2026): Goldman Sachs, JPMorgan, and Morgan Stanley are constructive, viewing the price-EPS divergence as a buying opportunity with prices likely to catch up to upward earnings revisions. Bank of America is the most cautious, anticipating further P/E compression despite solid EPS growth.
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