[US Stock Focus] Short positions reach over 3-year high; Goldman Sachs: Once positive news emerges, US stocks have "extreme" upside potential

SocialAnxietyStaker · 2026-03-12T07:41:36+00:00

The tense situation in the Middle East is affecting the U.S. stock market. Goldman Sachs experts believe that U.S. stocks have upward potential, and hedge fund holdings may contribute to a rebound. Currently, short positions have reached new highs, reflecting the market's facing multiple uncertainties. If positive news emerges, the stock market could surge significantly.

SocialAnxietyStaker

2026-03-12 07:41:36

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The ongoing tensions in the Middle East have sparked market concerns over an energy crisis, causing U.S. stocks to fluctuate recently. Despite the overall cautious atmosphere, Goldman Sachs Americas Equity Trading Services Head and Partner John Flood stated that U.S. stocks have “extreme” upside potential, believing that the current hedge fund positioning in the U.S. stock market sets the stage for a significant rebound after volatility.

He pointed out that most speculative investors continue to hold long positions in individual stocks while hedging through short ETFs and index futures. Data shows that short positions have reached their highest level since September 2022, reflecting the market’s attempt to digest multiple uncertainties, including geopolitical risks from the Iran conflict, pressures in the credit markets, and concerns over the pace of artificial intelligence (AI) development.

Long position unwinds drive stocks higher

These variables have temporarily suppressed investment appetite, but positive news—such as an end to Middle East conflicts—could prompt investors to unwind these hedges and trigger a noticeable market shift.

“If there is news announcing the end of the conflict, the index could surge significantly,” Flood said in an interview. “It could jump 2% to 3% straight away, with most of the gains coming from long unwinds in macroeconomic products.”

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