After the continuous big dump in the US stock market, reversal signals are gradually emerging.

In summary: short squeeze, seasonal factors, sentiment hitting bottom, pension fund rebalancing, retail investors continuing to buy, and cash waiting to be deployed may drive a rebound.

As of March 20, the data from Goldman Sachs trading desk:

The net leverage ratio of U.S. fundamental hedge funds (the gray line in the above chart) has sharply declined to a two-year low of 75.8%;

However, the total leverage ratio (the blue line in the above chart) is as high as 289.4%, the highest level in five years, which is clearly due to the rise of short positions.

The above figure shows that the total leverage ratio of funds in the United States rose sharply by 2.5% in March, while deleveraging occurred in other parts of the world.

The long/short (market cap) ratio has dropped to its lowest level in over five years at 1.64;

CTA funds have net shorted US stocks for the first time in a year and a half;

The above shows that high leverage has already decreased somewhat, but there is still room for deleveraging before the tariffs are implemented, and we are very close to a rebound.

The increase in total leverage is due to the rise in leveraged short positions, which could be a good thing. Data shows that hedge funds are reluctant to excessively reduce their long positions and instead rely on leveraged short hedges using external financing. When the market experiences unusual volatility, the financing party may issue a margin call, forcing shorts to close their positions or sell other assets to cover margin, greatly increasing the probability of a short squeeze. If funds choose the latter, which is selling other assets, it may amplify the unusual market volatility.

But note that this does not mean a guaranteed increase; rather, it means that if there is an increase, it will be aided by a short squeeze.

Market sentiment has fallen to a low point, and the market has returned to an environment where "good news is good news"; sentiment may have the possibility of rebounding:

The seasonal bearish trend is coming to an end:

According to data since 1928, the second half of March usually experiences significant fluctuations, and this year is no exception.

However, the S&P 500 index averaged a rise of 0.92% from March 20 to April 15, and averaged a rise of 1.1% from the end of March to April 15.

This indicates that there may be potential for a seasonal Rebound in April, but the magnitude is limited. After April 2, the market may stabilize if there are no major unexpected events.

U.S. pension funds are expected to buy $29 billion worth of U.S. stocks by the end of the quarter, ranking in the 89th percentile of absolute value estimates over the past three years and the 91st percentile since January 2000. This move may provide some support to the market:

Despite market fluctuations, the participation rate of retail investors remains stable. From 2025 to present, retail investors have only recorded net selling on 7 trading days, with a cumulative net buying amount reaching $1.56 trillion.

In addition, the asset size of money market funds (MMFs) continues to grow in the U.S., reaching $8.4 trillion. These funds represent the cash reserves of retail investors and other investors, and once market sentiment improves or investment opportunities arise, this capital may quickly convert into buying power in the stock market.

Market liquidity is still thin, which is often why there are significant fluctuations during the trading day. Be cautious of the risks.