Futures positioning in the S&P 500 and Nasdaq is moderately bearish, with the pace of flows slowing significantly, according to Citi strategists.
In both markets, investors are nearly one-sided short, with average profits of 2.6% in the S&P and 1.3% in the Nasdaq, as reported by the analysts in a note dated Oct. 9.
“The strong bearish flow in futures markets in September flipped investor sentiment but has slowed in early October,” they wrote.
Net positioning remains short in nearly all markets, but the recent trend is for more mixed flows and net positioning to track sideways, the strategists say. It is unclear whether the fading momentum could mark the bottom of the selloff, but so far no new bullish trend is evident.
It's worth noting that short positions are still moderately in profit, so there’s "little immediate P&L pressure" whether the markets go up or down from here.
In Europe, positioning is moderately net short, with around 3.3% profit on the dominant short positions.