NEW YORK, Aug 6 (Reuters) - Selling pressure by

volatility-linked funds that exacerbated losses in U.S. stocks

over recent days may be on track to ease, analysts said.

Volatility-linked strategies, including volatility control

funds and equities trend-following commodity trading advisers

(CTAs) control funds, are systematic investment strategies that

typically buy equities when markets are calm and sell when they

grow turbulent. They became heavy sellers of stocks over the

last few weeks, exacerbating a market rout brought on by

economic worries and the unwind of a massive global carry trade.

Monday's selloff, during which the S&P 500 fell 3%, saw the

strategies offload some $70 billion worth of stocks, according

to estimates from options research provider Tier 1 Alpha. The

move came as the Cboe Volatility Index notched its

biggest intra-day rise on record and closed at its highest level

since Oct 2020.

In aggregate, the funds have sold $150 billion over the last

three weeks, according to Tier 1 Alpha estimates.

However, the fastest-reacting strategies, including

volatility control funds and equities trend-following commodity

trading advisers (CTAs), may have lightened up their exposure

enough to ease up on the selling pace.

"These balancing requirements typically resolve over the

course of a couple of days max," said Craig Peterson, CEO of

Tier 1 Alpha. "I wouldn't expect this to bleed into the end of

the month necessarily unless we see a lot more weakness."

The S&P 500 was up more than 2% on Tuesday afternoon.

Estimates vary on how much money systematic strategies

command but most analysts agree the funds can add to the tempo

of market moves.

"Any model that has a vol (volatility) trigger can get

whipped around," said Joe Ferrara, investment strategist at

Gateway Investment Advisers, in a note. "Typically we tend to

see the large, quick spikes in volatility and then a rather

quick normalization to long-term levels."

But a quick return to calm stock markets may also see these

funds turning buyers again, analysts said.

"We're not there quite yet but eventually, call it a month

or two out, if volatility does start to subside it could be a

very bullish thing for the market to have all these flows come

back," Petersen said.