Source: Wall Street See

Retail investors in the US stock market are still buying heavily.$NVIDIA (NVDA.US)$Waiting for technology stocks, but Wall Street's 'smart money' has already begun to sell most of the stocks, especially those in the technology sector.

On Monday, Goldman Sachs pointed out in a report that as the US stock market hit a historic high, hedge funds have begun to turn to selling US stocks quickly.

Goldman Sachs analyst Vincent Lin said hedge funds have been actively selling and short selling TMT sectors (technology, media and telecommunications) over the past month, including semiconductor-related stocks such as Nvidia. In June alone, hedge funds' net sales in the US TMT sector will reach a record high for Goldman's major brokerage business. (Driven by short selling, fund managers have also reduced their net selling in consumer and essential stocks.)

Hedge funds are closing long positions and reducing risk exposure.

Goldman Sachs' data shows that hedge funds are reducing their risk exposure by closing long positions and slightly covering short positions. The US basic long-short leverage ratio has fallen for six consecutive weeks, down to 190.8%, and the net leverage ratio has fallen 2% to 53%, the largest drop this year, indicating that hedge funds are becoming more cautious and gradually reducing leverage and risk exposure. And flow data shows that hedge funds have net sold US stocks for three consecutive weeks, mainly driven by closing long positions.

Specifically, in the 11 major sectors of the US stock market, 8 sectors have seen net sales, including IT, essential consumer goods, real estate and financial sectors. The consumer goods sector in particular has been heavily shorted, with net sales for the third consecutive week and the largest net sales since November 2023. The industrial, material and energy sectors, on the other hand, have seen net purchases.

Goldman Sachs pointed out that one of the key factors behind the shorting of the US consumer sector last week was disappointing earnings reports from companies such as $Levi Strauss & Co. (LEVI.US)$ and $Nike (NKE.US)$as well as weak core PCE price indicators, which had a negative impact on market sentiment.

Have retail investors become hedge funds' bag holders?

Unlike recent rapid selling and shorting of US technology stocks by hedge funds, retail investors still hold hope for US technology stocks.

Vanda Research pointed out last Thursday that as of June 17th, individual traders are putting more money into semiconductor stocks - mainly NVDA and $Direxion Daily Semiconductor Bull 3x Shares ETF (SOXL.US)$.

On the one hand, hedge funds are quickly "exiting" technology stocks, while on the other hand, retail investors' continued influx remains. Vanda Research suggests that hedge funds are likely to sell large amounts of technology stocks to retail investors, and behind the calm market surface, there may already be a large turnover of stocks, with hedge funds likely selling a record number of technology stocks to individual investors.

Editor / jayden