A UBS sales report released on November 10th indicated that US stocks are experiencing their strongest bullish trend this year, with systematic fund positions significantly liquidated. The S&P 500 has at least 10% upside potential over the next three months. Rebecca Cheong, a structured strategist at UBS, stated that risk-controlled strategies have reduced their equity exposure to 55%, the lowest level since the tariff shock this year, while CTA (Commodity Trading Advisor) equity exposure has fallen to -5%, meaning that these trend-following funds have turned net short. Historically, risk-controlled strategies reduced their exposure to 55% in August 2024 and 30% in April 2025, respectively, after which the S&P 500 rose by 17% and 24% in four months. Cheong believes that this round of systemic deleveraging is largely complete, and subsequent declines are unlikely to be amplified by a similar scale of programmed selling. Meanwhile, retail investors, overseas investors, and the upcoming resumption of corporate share buybacks are expected to provide buying support, and the market rebound may also trigger CTAs and risk-controlled funds to increase their positions again, further driving the stock market upward. She expects the S&P 500 to exhibit low volatility and a gradual upward trend.
