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Sometimes the data tells a story that’s impossible to ignore — and right now, that story is coming from Goldman Sachs.
Hedge funds have built one of the largest short positions in small-cap futures in recorded history. This isn’t speculation or market chatter. This is hard data from Goldman Sachs showing Russell 2000 hedge fund shorts at historic levels.
When Wall Street’s biggest players are betting this heavily against an entire segment of the market, it’s worth paying attention. But there’s more to this story than just short interest.
The Spread That’s Breaking Records
The spread between large caps and small caps has reached unprecedented levels, and that divergence is creating serious vulnerability beneath the surface of what looks like market strength.
Here’s what the numbers actually show…
Only 51% of stocks are trading above their 50- and 200-day moving averages. When you break that down further, Russell 1000 large caps show 55% above key averages, while Russell 2000 small caps show only 48%.
That’s not just a statistical quirk — it’s a warning signal about market breadth that professionals are watching closely.
Why This Data Matters Now
This isn’t about calling a top or predicting doom. It’s about recognizing when the market is sending clear signals about underlying weakness that contradicts surface-level strength.
There’s significant vulnerability in this market when hedge funds are positioning this aggressively against small caps while the performance gap between large and small companies reaches historic extremes.
The fact that this data comes from Goldman Sachs — not some random newsletter or basement blogger — gives it the kind of institutional weight that serious traders can’t ignore.
When one of the largest short positions in history meets record-breaking performance spreads, it’s time to reassess risk and positioning. The market might look strong on the surface, but the internals are telling a different story.
I hope that helps!
Roger Scott
Roger Scott Trading
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