Goldman: Easing military tensions could trigger strong US stock rebound

In a new report, Goldman Sachs suggested that record pessimism and intense selling pressure have paradoxically set the stage for a strong market rebound if military tensions ease. According to the bank's Prime Brokerage desk, hedge funds have cut their global stock positions for six consecutive weeks, driven by short sellers. This sell-off has been broad-based, with net selling occurring across all major regions. The market has now reached a technical "Oversold" threshold. The report noted that selling momentum from systematic investors is becoming exhausted and that the market's asymmetry has shifted to the upside. Goldman Sachs anticipates that trend-following investors will likely return to buying over the next month, regardless of market conditions. The report also highlighted that rebalancing by pension funds and shifts in the options market are expected to alleviate pressure on stocks.