A financial blog notes that the widespread panic buying observed in the U.S. stock market since the beginning of the month would be healthy if it occurred after a genuine "all-clear" signal, such as last year's developments regarding tariffs under the Trump administration. However, if this panic buying is based solely on assumptions about the substantive meaning behind daily statements from Trump, the opposite holds true—it is not only unhealthy but could also represent a significant "bull trap."

From a technical analysis perspective, the market's strength has largely been supported by record buying from Commodity Trading Advisors (CTAs), which has provided a foundation for U.S. equities.

Current positioning remains extremely bearish, well below overcrowded levels, which can be considered one of the most bullish signals for the market. This ensures continued buying activity. Demand for equities that does not rely on subjective judgment is expected to persist, stock buybacks are set to resume, and declining volatility will allow net exposures to increase again.

Despite this, a Goldman Sachs trader, Cullen Morgan, wrote: "We have rallied quickly and sharply, and signs of chasing/overbought conditions are beginning to emerge." Several indicators point to this:

- Near-record call option volume in QQQ. - The market entered overbought territory in the second-shortest time ever: measured by the 14-day Relative Strength Index (RSI), the S&P 500 surged from oversold to overbought in just 11 days.

Deutsche Bank noted: The speed of this rally is astonishing, with the index gaining an impressive 10.7% over the past 11 trading sessions. This pace even slightly exceeds last year's "liberation day" rally, which saw a 10.1% gain over the same period. Excluding overlapping scenarios, such rapid advances are rare. Since the turn of the century, the S&P 500 has achieved gains exceeding 10% in 11 trading days only 15 times, averaging about once every two years.

This rally is second only to the even more rapid rebound in the summer of 1982, when Volcker sharply cut interest rates from 13%.

What comes next? Goldman's Morgan believes: A short-term pullback would likely be the healthiest outcome for the market at this stage, but the overall upward trend appears difficult to resist. He suggests replacing long positions with inexpensive call options on individual stocks or indices, which offer high cost-effectiveness. For hedging, Morgan favors using put spreads or ratio put spreads on IWM for downside protection.

Meanwhile, the Nasdaq 100 Index has risen for 13 consecutive days, marking its longest winning streak since 2013, while the Nasdaq Composite has also advanced for 13 straight days, its longest streak since January 1992. Since 1983, similar winning streaks have occurred only seven times, with subsequent forward returns being quite substantial.

According to Goldman Sachs Prime Brokerage data, net exposures and long-short ratios across overall prime brokerage books remain low, sitting at the 42nd and 3rd percentiles, respectively, over a three-year lookback period (compared to the 93rd and 14th percentiles in early March). Total leverage, however, remains high at the 97th percentile over the past three years. Overall short exposure in macro products (indices + ETFs) is only slightly below peak levels seen at the end of March.

As earnings season for large-cap U.S. tech stocks begins, Goldman Sachs traders have observed that hedge funds have started repurchasing shares of the "Magnificent Seven" tech giants this month, though positioning here also remains well below peak levels seen in early 2016.

Systematic strategies have attracted significant attention. U.S. equities have experienced their largest five-day buying spree on record. Goldman Sachs' latest estimates indicate that CTA net long positions stand at approximately $16 billion (compared to a historical peak of $74 billion). While there is still room for further increases—Goldman currently estimates about $23 billion in CTA buying over the next five days—this figure has dropped significantly from the $70 billion estimated earlier in the week, indicating a moderation in the pace of buying.

The market has now rebounded into peak Gamma territory. Citing third-party data, Goldman Sachs notes that market maker Gamma net long positions are around +$9.5 billion—one of the highest levels in the past four years, though this figure appears somewhat questionable. Morgan estimates that from this point, market maker Gamma will gradually decrease during rallies but exhibit stickiness during declines. After April option expirations, Goldman expects cleaner positioning, with Gamma strike prices shifting higher through systematic overwriting.

Finally, Morgan points out that volatility markets have shown clear easing: the Goldman Sachs U.S. Volatility Fear Index has fallen below 5/10, compared to levels above 9 just a few weeks ago. This suggests implied volatility has sufficiently receded, allowing Goldman's derivatives team to directly take long volatility positions in many scenarios.