Vanda: AI Trading Positions Hit by Largest Unwind in 15 Years
Alina Collins
Vanda Research says AI-linked positions are seeing the sharpest unwind in 15 years — retail investors have been net sellers for three straight days, the first such streak since March 2020; leveraged-ETF negative gamma means any dip could feed on itself, and a bottom is not yet confirmed.
What are retail investors selling, and why?
Retail net selling of single stocks has run for three consecutive trading days — the first such streak since March 2020.
Selling is concentrated in AI front-line names: Micron (MU), AMD, and Marvell (MRVL), all in the semiconductor and AI space.
Vanda sees two drivers: growing concern that AI capex growth is peaking, and investors freeing up cash for high-profile IPOs — SpaceX, Anthropic, and OpenAI.
Are institutions running too — in the same direction?
Institutions are pulling out of crowded AI positions, with semiconductors again the hardest hit.
Meanwhile, short sellers are pressing the advantage, rebuilding shorts on money-losing tech stocks.
This means → longs are cutting and shorts are adding; the AI sector's "crowded trade" is unwinding from both sides.
What is "mechanical selling pressure," and why is it dangerous?
Vanda flags two passive selling mechanisms that can amplify a decline: leveraged ETFs and CTAs — commodity trading advisors, funds that trade automatically on trend signals.
Leveraged ETFs are currently in a state of deep negative gamma. In plain terms = their structure forces them to sell more as the market drops, and that selling pushes prices lower still — a self-reinforcing downward spiral.
This reflects a risk beyond human decision-making: it is not just "people choosing to sell" but "machines forced to sell along with them."
Has the market bottomed?
Vanda is explicit: positioning has undergone a major reset, but calling a bottom now is premature.
The key test is whether the mechanical selling pressure described above can be fully absorbed — as long as leveraged-ETF and CTA passive selling is still running, the market can keep falling.
This means → the position clean-out is a necessary condition, not a sufficient one; a real bottom arrives only after "the machines stop being forced to sell."
Content is for reference only, not financial advice.