JPMorgan Chase's Global Head of Market Strategy, Dubravko, stated that deleveraging in US stocks is in its later stages. This round of US stock market correction was primarily triggered by overcrowding in AI trading, high leverage, and declining liquidity; the concentrated selling process is now well into its final stages.
Momentum trading crowding has decreased from the 100th percentile historically to the 76th percentile; leveraged ETFs sold $60 billion and $35 billion respectively in the last two key trading days, and their exposure is now lower than in January 2026; trend-following funds (CTAs) have turned net short, and volatility strategy leverage has decreased from the 65th percentile historically to the 30th percentile, but approximately $50 billion may still be available for sale. Corporate announcements of a $1.2 trillion stock buyback program are expected to provide support.
