A sharp drop in CTA buying in the U.S. stock market could trigger a sell-off of up to 100 billion USD if the S&P 500 falls by 3%.

The Bank of America model indicates that the potential for incremental CTA buying is extremely limited, while the risk of downside liquidation is intensifying. The key trigger levels are as follows: approximately 3% below the spot level for the S&P 500, about 5% below for the Russell 2000, roughly 10% below for European and Japanese equity indices, and a lower probability of triggering within the next week for the Nasdaq. If these levels are breached, global equity sell-offs by CTAs could reach around USD 100 billion, including approximately USD 50 billion in the United States, USD 35 billion in Europe, and USD 15 billion in Asia.

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