Tech saw the largest weekly reduction in hedge fund exposure since July 2024, and the 3rd-largest over the last 5 years.

Selling was driven by long positions being cut far more aggressively than shorts, at a 1.9 to 1 ratio.

Nearly every subsector was hit, led by Software, Semiconductors, Tech Hardware, and Communications Equipment.

Despite this wave of selling, tech exposure remains elevated at 20.6% of total US gross market value.

This is higher than 92% of the time over the last year and higher than 98% of the time over the last 5 years.

In other words, positioning is still crowded even after aggressive selling.

Across the broader market, hedge funds have now been net sellers in 9 of the last 10 weeks, driven almost entirely by long sales.

Overall, flows show capital rotating out of high-growth sectors while Energy and Health Care saw modest buying.

There is still significant downside risk if tech selling accelerates from here.