Get 40% Off
💰 Buffett reveals a $6.7B stake in Chubb. Copy the full portfolio for FREE with InvestingPro’s Stock Ideas toolCopy Portfolio

Citi: Extended positioning could amplify pullback in US stocks

Published 04/16/2024, 04:42 AM
Updated 04/16/2024, 04:46 AM
© Reuters.  Citi's Montagu: Extended positioning could amplify pullback in US stocks
US500
-
STOXX50
-
HK50
-
KS11
-

A large volume of long positions in US stocks already experiencing losses could lead to increased market pressure, Citigroup strategists said in a weekly note.

The strategists noted in their analysis that there are long positions worth $52 billion on the S&P 500, with 88% of them currently in the red, posing a risk to the market.

“Long unwinds on the S&P have mainly been profit-taking transactions, but the remaining longs now are on average 0.8% in loss,” they wrote.

“Should the market turn negative the move could be faster and larger due to the large, long positions already in the red,” added analysts.

In Europe, the positioning in the Euro Stoxx 50 is deteriorating more gradually compared to the US, but the trend is not optimistic, as the recent activity has largely involved establishing new short positions and closing long positions. Meanwhile, exchange-traded fund (ETF) inflows remained strong.

In China, the market sentiment is similarly bearish, with significant negative flows in A-shares and many existing long positions incurring losses, suggesting that bearish momentum could intensify moving forward.

“There's been little to no directional flows in Hang Seng in the past 3 weeks and net positioning has gradually faded to neutral, but Kospi has had a few recent profit-taking sessions, where investors are also adding new short risk and this means the moderately long net positioning is quickly fading and sentiment in April is clearly more bearish,” said the team.

Latest comments

this article is only a fear tactic. more dishonest practices and fake news here
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.