Goldman Sachs Analysts Forecast Global Equity Markets Downside | Trend Signals Bearish
Goldman Sachs analysts have predicted further declines in global equity markets based on their momentum models. More than 70% of their trend signals across markets and time horizons are now negative, a significant increase from the previous week.
While there has been some stabilization and a rebound in equity markets, the overall trend remains bearish. Commodity Trading Advisors (CTAs) and trend-following strategies have reduced their long positions in global equities, with around $150 billion cut to $90 billion since mid-July.
Goldman Sachs notes that short trend signals are now negative in all markets tracked, with medium trends negative in at least 80% of markets. CTAs have sold approximately $41 billion of global equities in the past month, with $32 billion sold in the last week alone.
The SPX and Topix markets have been heavily sold, with Topix seeing all trend signals turn negative. The investment bank expects further selling from risk-parity style and volatility control strategies, estimating another $30 billion in equity sales over the next week.
While systematic strategies are currently driving the negative trend, total institutional length in US index futures remains high. This suggests there may be more room for selling if the negative trend continues.
In summary, Goldman Sachs' analysis indicates a bearish outlook for global equity markets, with significant selling pressure from various strategies. Investors should be cautious and monitor market trends closely to protect their investments.