Goldman Warns Of Faceripping Meltup As "CTAs And Buybacks Will Be Out In Full Force"

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by Tyler Durden
Friday, Jul 29, 2022 - 11:22 AM

It was another torrid meltup for markets, one which steamrolled bears and underinvested hedge funds, but regular Zero Hedge readers were prepared for the move for two reasons: i) we previewed the dramatic impact the early Fed pivot would have a few weeks ago, and ii) over the weekend we warned that there is a massive tidal wave of buying on deck in the form of $11BN VWAP bids between stock buyback orders and CTAs blindly buying risk just because VIX keeps dropping.

Well, prepare for much more of the same because as a reminder, Goldman's trading desk calculated that if spoos rise above 4070, CTAs will double their daily buying from $5BN to $10BN per day, to wit:

CTAs: have $5b of S&P to buy per week at these levels. North of 4070 (long term momentum) this demand essentially doubles.