S&P 500 faces systematic CTA selling trigger
The technical thesis warned that if the S&P 500 breaks below the key 7,300 level, it could trigger massive systematic CTA liquidation.
The argument
The speaker noted that the index is currently testing its 50-day moving average. A breach of 7,300 is estimated to trigger $100 billion to $150 billion in systematic selling, potentially forcing a rapid 10% peak-to-trough pullback to 7,000.
The thesis, stress-tested
✓ What validates it
- ✓S&P 500 closing below 7,300
- ✓Reports of large-scale CTA liquidation flows
▸ Risks discussed
- ▸Bulls keeping the market pinned above 7,300
- ▸Structural selling already being completed prior to major IPOs
Hear it yourself
"And what I'm gonna do today is kinda share the insights, the valuable insights that I'm getting from the top institutions around the world in triangulating that information. And that's why I love this platform because I wanna democratize the information. I want, you know, your phenomenal audience to to really have a front row seat as to what the top institutions are talking about. The biggest thing in recent weeks is the consumer oil inflation. And you could see here on slide two, junk bonds. The high yield market as a whole is okay, but the tertiary parts and these are the typically the leading indicators."
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