LONDON, Nov 20 (Reuters) - The S&P 500 index's fall

below a closely watched level gave hedge funds that trade stocks

on trends the green light to potentially sell almost $40 billion

in equities in the coming week, Goldman Sachs ( GS ) said in a

note to clients seen by Reuters.

The S&P 500 declined in value past a threshold of

6,725 on Wednesday. It closed the day at 6,642.

Trend-following hedge funds were watching that threshold as

a signal to either sell out of their positions, or to add short

bets that stocks would fall further, the note sent to clients

late on Wednesday said.

After prices fell below that figure, Goldman's calculations

suggest that over the next week, $39 billion of global equities

might be sold.

Should stock prices extend falls, the bank estimates that

systematic trend hedge funds could sell as much as around $65

billion.

Trend-following hedge funds aim to capitalise on signals on

the start of market trends - whether up or down. These signals

can be based on the volume of traders in a market, the price or

how fast an asset price changes during the trading day.

Before stocks began to sell off, these hedge funds were long

around $150 billion worth of global equities, the Goldman note

said.

The last time prices fell through one of these closely

watched levels was in October, said Goldman, and prior to that,

on April 2 when U.S. President Donald Trump announced a raft of

tariff proposals.

(Reporting by Nell Mackenzie; Editing by Dhara Ranasinghe and

Emelia Sithole-Matarise)