Goldman's Panic Index hits ‘max fear' as traders warn Wall Street to ‘buckle up'

• Goldman's Panic Index hit 9.22, reflecting investors paying up for downside protection as market volatility surges
• Analysts estimate $33 billion in US equity selling could occur this week, with potential for $80 billion more if S&P 500 breaks below 6,707
• Commodity Trading Advisers are expected to remain net sellers regardless of market direction, while Friday's 2% rally is viewed as a relief bounce rather than a fundamental shift

Goldman's Panic Index Signals "Max Fear" as $33 Billion Selloff Looms

Goldman Sachs' proprietary Panic Index has surged to 9.22, approaching "max fear" levels, signaling heightened market stress despite Friday's rally. The index, which combines S&P 500 implied volatility and other measures, reflects investors aggressively purchasing downside protection amid expectations of larger, more frequent price swings.

Key Figures:

• Goldman's trading desk estimates $33 billion in potential equity selling this week
• If the S&P 500 falls below 6,707, an additional $80 billion could be shed over the next month
• The S&P 500 gained approximately 2% on Friday, its largest single-day jump since May, though it remains below recent highs

Market Dynamics:

Elevated volatility is triggering systematic selling by Commodity Trading Advisers (CTAs)—trend-following funds that adjust positions based on momentum rather than fundamentals. Goldman expects CTAs to remain net sellers regardless of short-term price direction after the S&P 500 breached key technical thresholds.

Sector Impact:

Technology stocks drove earlier weekly declines, with concerns centered on AI disruption and Big Tech capital expenditures. However, market breadth shows resilience in foreign stocks, US small caps, and equal-weight S&P 500 indexes. Commodities and crypto assets are underperforming alongside tech.

Analyst Perspective:

Dean Lyulkin of The Dean's List cautioned investors against overreacting, noting that "big shifts in views take months and quarters to develop, not days." Friday's rally is viewed as a technical relief bounce and short-covering event rather than a fundamental shift, occurring as the Federal Reserve maintains steady rates and the economy remains on "firm footing."