After buying US stocks for two consecutive weeks, the US stock market reached a historical high, and smart money started selling again.

According to the latest weekly report from Goldman Sachs, hedge funds sold US stocks in the past week, unwinding 25% of their recent long positions, with short selling trades amounting to more than twice the buying amount.

Macro products (a combination of indexes and ETFs) accounted for almost all of the net sales in the US, with three out of the past four weeks showing net sales. The amount of short selling trades was more than three times that of buying.

Last week, the nominal short selling volume of macro products hit the highest level since early January, reaching the 97th percentile in five years. Goldman Sachs trader John Flood pointed out that this demonstrates an increase in hedge fund hedging activity.

However, US individual stocks saw net buying for the fourth consecutive week, with buying trades amounting to 1.6 times that of short selling.

The industries with the most net buying in the US are healthcare, utilities, and industrial sectors, while the industries with the most net selling are non-essential consumer goods, financials, and real estate.

Before last week, US hedge funds made massive purchases of US stocks at their fastest pace in four months, resulting in the largest net buying volume since December 2023, mainly driven by long purchases and some short covering. Among the purchased stocks, information technology stocks were popular choices, with hedge funds seeing the third consecutive week of net buying and the fastest pace in five months.

USA hedge funds continue to increase net exposure to medical care and remain overweight.

Last week, US hedge funds bottomed out on medical care stocks (rising by 2.1 standard deviations), mainly due to long positions and short selling replenishment. Medical care has been the most net-buying industry in the USA since October, with net purchases for five consecutive weeks.

Most sub-industries under the medical care sector saw net purchases last week, mainly including pharmaceuticals, healthcare providers & services, as well as medical devices and supplies.

Currently, hedge funds' overweight ratio in the medical care field has increased by 8.8 percentage points, close to the highest overweight level in the past five years relative to the s&p 500 index.

The overall long-short ratio of US medical care is now at 2.45, the highest level since January, ranking in the 46th percentile over the past five years.

USA hedge funds are underweight in real estate stocks.

Over the past four weeks, hedge fund managers have all seen net selling in real estate stocks, with short sell trades being six times the buy trades.

Among them, specializedReal Estate Investment Trust（REITSector real estate investment trusts and residential REITs were the top net sellers in the subsector last week, while real estate management & development and industrial REITs saw moderate net buying.

Currently, hedge funds have reduced their underweight allocation in the REIT sector by 1.6 percentage points, the lowest level since January, ranking in the 20th percentile over the past five years relative to the s&p 500 index.

Last week, there was a slight net buying trend in the "pure long" positions.

Apart from hedge funds, Goldman Sachs' stock sales trading division noted that last week, the “pure long” positions ended up with a slight net buying trend, with the highest buying amounts in energy, technology, and industrial sectors, while communication services saw net selling.

However, Goldman Sachs pointed out that overall trading volume was small last week.

Looking back at past US presidential elections, except for 2008, the trading volume generally decreases before election day. Once the elected president is confirmed, the trading volume will sharply increase, usually maintaining around 30% of the total trading volume.

It is worth noting that data from Goldman Sachs Private Bank shows that mega cap technology stocks have overall shown net buying since October, mainly due to short sell covering, with long positions contributing relatively little. However, from a holdings perspective, the group's net allocation and long/short ratio are both much lower than the levels at the beginning of the first and second quarter earnings reports, which bodes well for the third quarter earnings.