A spike in market volatility could soon force a wave of automated selling from hedge funds that follow price trends, potentially worsening any market pullback, according to JPMorgan. Commodity trading advisors, or CTAs are computer-driven hedge funds that use momentum signals to ride market trends. They came into last week’s selloff “near max-long” in equities, JPMorgan said. Those bullish positions leave them vulnerable if volatility persists and short-term price momentum turns negative. “While they will likely modestly de-lever due to the increase in volatility, they may face a more significant adjustment this week if the sell-off continues,” the Wall Street firm said in a note to clients. .SPX 5D mountain S & P 500 over the past 5 days Volatility picked up drastically in recent sessions as trade tensions between the U.S. and China escalated after President Donald Trump threatened to place an additional 100% tariff on Chinese imports . The Dow Jones Industrial Average on Friday lost more than 800 points, while the S & P 500 posted its biggest one-day loss since April 10. Stocks rebounded Monday after Trump dialed back his rhetoric. JPMorgan estimates that a further 1% to 2% decline from Friday’s close could start to flip short-term models negative. An extended slide of 4% to 6% would likely push three-month and 100-day trend indicators into sell territory, levels that typically force large position adjustments, the firm said. — CNBC’s Michael Bloom contributed reporting. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
