Record Systematic Shorts: Profit-Taking Pullback Ahead | Seth Golden

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.

 

Record short positioning of systematic traders in Q1 2026—profit-taking pullback likely.

This segment of systematic traders has emerged as one of the most influential forces in equity markets in recent months. Having established aggressive short positions in spring 2025 and again in 2026, the group reached its longest and most extreme short exposure on record. Such outsized positioning suggests that systematic traders are now poised to take profits, thereby increasing the likelihood of a near-term correction in major 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?

Taken together, these flows indicate that the momentum-driven buying that fueled the recent rebound has become stretched, pointing to a material decline in marginal demand. For individual retail investors, this setup implies an elevated risk of near-term exhaustion or pullback in major indices and technology stocks once systematic support diminishes. While continuation remains possible in a strong uptrend supported by further modest CTA buying, any meaningful stall or breakdown could rapidly amplify selling pressure.

 

Reference: 

Seth Golden, May 7, 2026.

 

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. 

NQ (daily candles).
 Today, May 7 (Thu) is the scheduled ideal ITD #5 peak (± 4 CD) in US stocks.

 

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.   

See also: 

Jason Goepfert (May 4, 2026) - Hedge Funds Dump Tech, While Retail Piles Into QQQ.

Alex Krainer (April 27, 2026) - S&P 500 Dumb Money Confidence Enters Extreme Optimism.

Jeffrey A. Hirsch (May 1, 2026) - May Stock Market Performance in Midterm Election Years. 

ICT Intraday Templates & Setups for ES/NQ/YM | Michael J. Huddleston

There are six Intraday Templates and Trading Setups for the S&P (ES), the Nasdaq (NQ) and the Dow Jones (YM) - three bullish and three bearish ones:

• Two Session Up Close OR Two Session Down Close. (1.1 + 1.2)
• AM Rally and PM Reversal OR AM Decline and PM Reversal. (2.1 + 2.2)
• Consolidation AM Rally and PM Decline OR Consolidation AM Decline and PM Rally. (3.1 + 3.2)

1.1    Two Session Up Close (Trend Day ≈ 10% of all trading days)

If we are in the middle of an intermediate or long term price swing based on what we would see on the HTF (Higher timeframes = 4 hour, daily, weekly, monthly) chart, this is the classic scenario. When we start approaching HTF opposing arrays, this profile is less likely to occur. The daily range can go straight trough the lunch hour with very little consolidation whatsoever, depending on what the catalyst was that send prices higher it could be a very strong economic news release. Don't think we’ll always get the consolidation in lunch hour, if we move higher fast there is a chance they work trough lunch. PM session would be ideal if its symmetrical to the AM session.

• Institutional Order Flow (IOF): Bullish.
• AM Trend: Returns to a Discount Array then rallies.
• Lunch Hour: Consolidates with shallow retracements.
• PM Trend: Runs the Lunch Hour Lows [Sell Stops] OR Drops into a Fair Value (FV) Discount Array then rallies into Close.

 1.2    Two Session Down Close (Trend Day ≈ 10% of all trading days)

If we are in the middle of an intermediate or long term price swing based on what we would see on the HTF chart, this is the classic scenario. When we start approaching HTF opposing arrays, this profile is less likely to occur.

 

• Institutional Order Flow: Bearish.
• AM Trend: Returns to a Discount Array then declines.
• Lunch Hour: Consolidates with shallow retracements.
• PM Trend: Runs the Lunch Hour Highs [Buy Stops] OR Rises into a Fair Value Discount Array then declines into Close.
  

 

Tips for Two Session Up Close OR Two Session Down Close = trending days:
► When daily and 4H institutional order flow is bullish (two session up close)/bearish (two session down close).
► If we're in the middle of an intermediate term or long term price swing based on what we see on the HTF chart, then this is the classic scenario until we start approaching an opposing array on the 4h/daily/weekly. PM session would be ideal if its symmetrical to the AM session (measured move).
► The daily range can go straight through the lunch hour with very little consolidation whatsoever, depending on what the catalyst was that send prices higher it could be a very strong or surprised economic news release.
► Don't think we'll always get the consolidation in lunch hour, if we move higher fast there's a chance they work through lunch.
► ► How to trade: ICT always looks for SMT (Smart Money Tool / Smart Money Technique) between the 3 indices at the lows/highs on both sessions.
AM SMT: compare London lows/highs and 9:30 am lows/highs.
PM SMT: compare lunch lows/highs and the high/low formed from the 13:00 candle. One has to diverge.
AM session hold till about 10:30-11:00 and also look for 15m PD arrays.
PM session: besides the SMT we can also return to FVG or OB formed in lunch hour.

2.1    AM Rally PM Reversal (Typical Day ≈ 25% of all trading days)

Price is yet to fulfill a completion of a bullish run, but very close to where we are presently there is a higher time frame premium PD (Premium/Discount) array. The session will start off bullish until it hits the HTF PD array which causes the intraday market reversal.

 

• Institutional Order Flow: Bullish - under HTF Premium-Discount Array.
• AM Trend: Returns to a Discount Array then rallies.
• Lunch Hour: Consolidates with shallow retracements.
• PM Trend: Runs the Lunch Hour Highs [Buy Stops] and reverses into Close OR Runs the Intraday High and then reverses into Close.
• PM Trend can resume higher if AM session Discount = HTF.

 

2.2   AM Decline and PM Reversal (Typical Day ≈ 25% of all trading days)

 

• Institutional Order Flow: Bearish (IOF) - above HTF Discount Premium/Discount Array.
  AM Trend: Returns to a Premium Array then declines.
• Lunch Hour: Consolidates with shallow retracements.
• PM Trend: Runs the Lunch Hour Lows [Sell Stops] and then reverses into Close OR Runs the Intraday Lows and then reverses into Close..
• PM Trend can resume lower if AM session Premium = HTF. 

 

Tips for AM Rally PM reversal (bullish)/AM Decline PM reversal (bearish):
► When daily and 4H institutional order flow is bullish/bearish and price is near a 4H/daily TF PD array, so this model is the completion of a run. AM session is bullish/bearish until it hits the HTF pd array which causes the intraday market reversal.
► In the AM scenario you first drop into a 1H or 4H discount (bullish) / premium (bearish), then rally into HTF PD array (4H/daily/weekly).
Smart money reversal (SMR) - PM trend could either

- Run out the AM high/low and then rally or make a LH when it reverses. Just a run above a STH is also possible.
- Be just a retracement into the AM range and then continue HTF trend or really reverse on HTF. How do we know which one the PM trend will do? The PM session can resume higher/lower (reversal) if the AM session premium array equals a higher timeframe (4H, daily, weekly, monthly) premium array, it can go back into that array in PM and recapitalize that and then go lower and resume lower. If that’s NOT the case we can expect price to continue until we reach that HTF array.

► ► How to trade: ICT always looks for SMT between the 3 indices at the lows/highs on both sessions.

AM SMT: compare London lows/highs and 9:30 lows/highs. PM SMT: compare lunch lows/highs and the high/low formed from the 13:00 candle. One has to diverge. So in the bearish scenario: If the AM high around 10:30am EST but often closer to 11:00 is below a 15m or the PD array, then we're going to be anticipating, before it even happens, outside the London lunch around 1 pm an initial rally into the 15m PD array followed by a HTF reversal. So in the AM session we're going to be holding our trade until there.
PM SMT: try to hold until 15:00 at least. If price is in the premium of the AM dealing range, we could see price continue lower/higher (when the premium array is not a HTF premium array), otherwise price will reverse there.

 

3.1    Consolidation AM Rally PM Decline (Trading Range /Neutral Day ≈ 35% of all trading days)

If unsure of what the IOF of the current day is or where we are relative to Premium/Discount on Daily/4h, chances are we likely see this scenario - especially if there is no high/medium impact news expected during 10am or later in the day.

• Institutional Order Flow: Neutral.
  
• AM Trend: Returns to a Discount Array then rallies OR expands Higher from Equilibrium to run London session Buy Stops.
• Lunch Hour: Consolidates with shallow retracements.
• PM Trend: Runs the Lunch Hour Highs [Buy Stops] and then reaches for Day's Sell Stops OR Runs the Intraday High and then reaches for ID/London session Sell Stops. PM Trend can simply consolidate into Close after Lunch Hour.
  

3.2    Consolidation AM Decline PM Rally (Trading Range / Neutral Day ≈ 35% of all trading days)

If unsure of what the Institutional Order Flow of the current day is or where we are relative to Premium/Discount on Daily/4h, chances are we likely see this scenario - especially if there is no high/medium impact news expected during 10am or later in the day.

• Institutional Order Flow: Neutral.
• AM Trend: Returns to a Premium Array then declines OR expands Lower from Equilibrium to run London session Sell Stops.
• Lunch Hour: Consolidates with shallow retracements.
• PM Trend: Runs the Lunch Hour Lows [Sell Stops] and then reaches for Day's Buy Stops OR Runs the Intraday Low and then reaches for the Intraday London session Buy Stops.
• PM Trend can simply consolidate into Close after Lunch Hour. 

Tips for Consolidation AM Rally and PM Decline / Consolidation AM Decline and PM Rally:

► In this scenario Institutional Order Flow is neutral or unclear where we're at relative to premium or discount on 4H or daily. This scenario happens a lot in index trading which can be frustrating if you don’t know the mechanics behind it. When there's a strong directional bias behind the marketplace or the underlying meanings of the market suggest higher/lower prices, DO NOT look for this scenario. This is not seek and destroy (NFP), this is simply consolidation. This happens when there’s a lack of news or trend.

AM: price returns to a premium/discount then rallies OR after the first hour of the opening range or expands higher from EQ to run SSL/BSL (Buy Side Liquidity/Sell Side Liquidity)from London or intraday.
PM: 2 scenario’s —> 1. Run on lunch hour highs/lows then rally for AM session BSL/SSL or 2. run intraday high/lows and then run for intraday or London SSL/BSL.

► ► How to trade: Which one is it going to do, lunch highs/lows or AM SSL/BSL? We are going to be looking for a 15m PD array inside a 4h/Daily PD array. So the HTF confluence is the catalyst for the reversal. If that PD Array was already reached in AM, PM will just run out lunch hour highs/lows.

If the PM session takes lunch hour SSL/BSL or AM session SSL/BSL is dependent on the AM session BSL/SSL. If these lows/highs reached into a 15m PD array inside a 4h/Daily PD array PM will just run out lunch hour highs/lows.

How to know if the PM session will run lunch or intraday highs?

HTF PD array hit in AM session = Lunch highs likely to be run.
HTF PD array NOT hit in AM session= PM session  could run the intraday high, hit the HTF Premium array, and then reverse.

 

Quoted from:
Michael J. Huddleston (2017) - ICT Mentorship Core Content - Month 10 - Index Futures - Projected Range & Objectives. (video) 

 

See also:

 Darya Filipenka (2023) - ICT Mentorship Core Content - Month 10 - Index Futures - Index Trade Setups.

Darya Filipenka (2023) - ICT Deep Dive Into Institutional Order Flow.

 Michael J. Huddleston (2015) - ICT Intraday Trading Templates.

ICT Redelivered Rebalanced Premium-Discount Array | Darya Filipenka

A bullish price range is a portion of price action that shows an upward movement, followed by a downward movement, and then another upward movement. This creates a balanced price range where the price action has delivered buy side, sell side, and then buy side again.

 

On the other hand, a bearish price range is a portion of price action that exhibits a downward movement, followed by an upward movement, and then another downward movement. This creates a balanced price range where the price action has delivered sell side, buy side, and then sell side again. 

 

The redelivered rebalanced PD array is depicted with candlesticks, showing the sequence of price moves: up, down, and then up again for a bullish array, and down, up, and then down again for a bearish array. This portion of price action represents a balanced price range.

Imagine the candlestick chart showing this sequence. The first candle goes up, offering buy-side, then goes all the way down to provide sell-side, closing at the bottom. Inside this candle’s wick, we see both buy-side and sell-side. The next candle opens, offering buy-side again, completing the balanced price range. This area of price action is fully balanced.

Now, here comes the interesting part. When there's a balanced price range below a fair value gap, the gap can stay open. This is what we call a breakaway gap. On the other hand, if there's a balanced price range above a gap, it becomes a bearish rebalance redelivered price area, and the gap may not need to be retested.

 

Reference: 

Darya Filipenka @ Twitter/X

 Michael J. Huddleston (2023) - ICT Mentorship 2023 - Immediate Rebalance & Institutional Order Flow. (video)

TTrades (2023) - Discount & Premium - ICT Concepts.