The market is at a "breaking point"! Goldman Sachs revealed: this week, institutional selling and shorting of US stocks reached "historic levels".

Unprecedented institutional selling spree is pushing US stocks to a dangerous tipping point - it could trigger a short squeeze when there is a geopolitical turnaround, or escalate into a deeper decline as tensions continue to worsen. According to data from the Goldman Sachs Futures Trading Platform, from March 3rd to 10th, asset management institutions sold a net amount of $36.2 billion worth of S&P 500 futures, marking the largest single-week reduction in over a decade in nominal terms. Goldman's Robert Quinn directly attributed this rapid exodus of institutions to the Iran war and the accompanying sharp rise in oil prices. At the same time, data from the Goldman Sachs ETF Trading Platform shows that on Thursday of this week, short positions in US-listed ETFs increased by 10%, marking the second largest single-day increase in history for Goldman, and macro products' overall short exposure reached its highest level since September 2022. Both futures selling and ETF shorting are advancing simultaneously, indicating the extreme pressure in the market is becoming increasingly clear. However, the ultimate outcome of this game largely depends on the evolution of geopolitical situations. According to John Flood, head of Goldman Sachs' US trading, investors are still hopeful that the widespread uncertainty caused by the Iran war will dissipate soon, but the time window for this hope is narrowing - if there are no positive developments in the next two weeks, "there will be a problem from the perspective of stock indices." Institutional net selling of $36.2 billion, S&P futures face largest single-week sell-off in a decade Goldman Sachs Futures Trading Platform data revealed the historic anomaly in institutional behavior this week. During the week of March 3rd to 10th, asset management institutions sold a net amount of $36.2 billion worth of S&P 500 futures, surpassing any weekly selling record in over a decade in nominal terms. Robert Quinn pointed out in the report the core driver behind this rapid exodus: the ongoing escalation of the Iran war resonating with the simultaneous sharp rise in oil prices catalyzed the rapid flight of institutional funds. It is worth noting that while institutions were selling futures in large quantities, the attitudes of other non-commercial market participants were divided, with leveraged funds showing relative resilience in sentiment amid the continued volatility in the commodities market, and not exhibiting the same intensity of directional bets. Record ETF shorting, short exposure climbs to three-year high In the same week as the historic futures sell-off, the Goldman Sachs ETF Trading Platform also recorded a set of stunning data. On Thursday, the short positions in US-listed ETFs in Goldman's bulk brokerage accounts increased by 10% in a single day, marking the second largest single-day increase in history for Goldman, only surpassed by the 16% increase recorded on April 2, 2025. The overall short exposure of macro products has been pushed to its peak since September 2022 by this resonating pattern of futures and ETFs. This comparison holds special significance - April 2, 2025 was one of the most severely impacted days by policy shocks in the market thus far, and the current intensity of ETF shorting is already closely approaching the level seen at the time, reflecting the current extent of market depression sentiment. Short squeeze and collapse, coexisting on both sides of the tipping point Despite the unprecedented scale of this reduction, Goldman warns its clients that institutional investors' net long positions have remained at the 71st percentile over the past two years and have not been fully liquidated. This structural feature means that the market is currently in a highly sensitive state of balance, with the direction not yet firmly established. John Flood pointed out that a large-scale de-risking operation (benefiting from the simultaneous surge in ETF shorting while overall leverage has not fully contracted) combined with a rapid deterioration in sentiment - as sentiment indicators and institutional S&P futures positions are almost perfectly synchronized - means that with just one trigger point, a fierce short squeeze could be triggered, causing the "weak hands" institutions who had previously sold off massively to get caught up in a rush to buy in a perfect storm. The outcome of these two vastly different scenarios ultimately points to the same key variable: the course of the Iran war. John Flood stated that investors are still hopeful that the widespread uncertainty triggered by this conflict will dissipate soon. Once there are signals of easing tensions, the accumulated massive short positions could become the fuel to ignite a market surge; however, the longer the market delays, the greater the vulnerability, eventually leading to breaking the tipping point and causing an unavoidable downward shock. "Markets are hoping for some signals of resolution within the next two weeks," John Flood cautioned: "But if this situation continues, if there is no positive progress, then from the perspective of stock indices, we will be in trouble." This article is reproduced from "Wall Street View". Editor: Jiang Yuanhua.