Earlier this week, I highlighted (or re-highlighted is more apt given the number of times I’ve been over this story) still-ballooning AUM in mass market, levered equity products.

Those products — leveraged stock ETFs — have about $150 billion in assets between them. One way or another (i.e., through exposure to the main benchmarks where the mega-caps are ~35-40% of the index or through more targeted exposure to AI and semiconductor names), the vast majority of that AUM’s concentrated in the tech leadership.

So, in addition to the built-in amplification potential posed by these products’ end-of-day rebalancing needs, their extreme tech/AI/semi concentration serves as an extra source of “oomph,” if you will. (If you didn’t read “The Underappreciated Impact Of Leveraged Stock ETFs,” I encourage you to peruse it at your leisure.)

Headed into the afternoon on Friday, big-tech in the US was on track for its worst week since “Liberation Day,” affording me a perfect opportunity to pen a quick follow-up to the above-linked article. Consider the figure below, from Nomura’s Charlie McElligott:

This was set to be the second-largest one-week notional negative rebalance flow in the history of Nomura’s data series, at nearly $26 billion of selling.

That’s what I meant on November 4, when I called that flow “under-appreciated.” It almost surely contributed to that day’s NDX selloff (the worst since Donald Trump’s triple-digit China tariff threat on October 10) as well as Thursday’s swoon.

“At this point, it should go without saying that the synthetic negative gamma of the leveraged ETF universe [can] further amplify the prevailing market direction into the mechanical EOD rebalance needs,” McElligott said, noting that AUM was still nearly $145 billion — 99%ile — as of Friday morning.