Hedge Funds Sell Tech Stocks at Fastest Rate in Two Years

Behind the record highs of the index, hedge funds are exiting tech stocks at the fastest pace in two years.

As of April 25th last week, both the S&P 500 and the Nasdaq rose, with the Nasdaq 100's weekly gain reaching 2%. However, data from Goldman Sachs' trading desk reveals another side: on Friday, when the S&P 500 hit a historical high, 324 of its constituents closed lower, with a net breadth reading of -148, the second-worst market breadth on a record-high day in recorded history.

Beneath the surface prosperity, the internal division within the market has become quite evident.

Data from Goldman Sachs' prime brokerage shows that last week, the total leverage of U.S. long/short hedge funds decreased by 4.6%, with the U.S. stock market experiencing its largest nominal deleveraging in seven months, driven primarily by risk closing of individual stocks. U.S. stocks have been net sold by hedge funds for two consecutive weeks, with net selling in 9 out of the past 10 weeks, and the selling has almost entirely come from long unwinding.