Goldman Trading Desk Warns "Hedge Funds Are Fighting This Rally" And The Squeeze Will Push Stocks Even Higher

Tyler Durden's Photo
by Tyler Durden
Monday, Apr 01, 2024 - 07:00 PM

Last night, when looking at the latest market positioning, we predicted that the short squeeze was likely to last because while most investors had gladly gone for the momentum-chasing meltup ride, hedge funds - especially the fundamental long/short variety - have been just as relentlessly shorting single names for much of the historic post-October meltup. As proof we cited from the latest GS PB report which found that "single stock short flow has increased for 7 consecutive weeks" and "saw the largest net selling since early January, driven entirely by short sales as long flows were fairly muted." with "7 of 11 US sectors were net sold on the week."

Fast forwarding just a few hours to this morning, Goldman desk trader John Flood picked up on this observation and in his latest note (available to pro subs in the usual place) writes that according to the bank's PB data, "US Single Stocks saw the largest net selling since early January (-1.1 SDs), driven entirely by short sales." And continues verbatim: "US Single Stock short flow has increased for 7 consecutive weeks. TMT stocks (Info Tech + Comm Svcs) collectively were net sold in each of the last 3 sessions into quarter-end and made up ~75% of last week’s notional net selling in all US Single Stocks."