Citi has warned that the technology-led selloff has weakened investor positioning across global equity markets and that the adjustment in U.S. stocks may not be finished. The bank flags the Nasdaq as the most vulnerable market, with European indices turning bearish and Asia still under pressure.
Citi warned that the slide in technology and artificial-intelligence shares has prompted widespread risk reduction, leaving U.S. equity positioning exposed to further pressure. Selling has spread across large-cap stocks, the bank said, pushing several major markets into a more defensive stance.
The sharpest shift has come in the Nasdaq, where strategist David Chew said positioning had "reset lower but remains vulnerable given all longs are currently in loss." Positioning in the S&P 500 has softened mainly as investors unwound long positions, while the Nasdaq saw a more aggressive mix of long liquidation and fresh shorts that pushed it to its lowest level in a month.
Citi also pointed to growing caution across European markets, where bearish positioning is building faster than prices are falling as investors take profits and open new shorts. The DAX has moved into outright bearish territory, and bullish positioning in the Euro Stoxx has retreated, while the FTSE stood out as a relative outperformer as investors covered shorts and added risk.
Across Asia, Citi named South Korea’s KOSPI as the market most exposed to further deleveraging, because positioning there stays elevated despite the index’s decline.
Chew cautioned that the crowded bearish bets create asymmetric squeeze risks should sentiment stabilise or macro data surprise to the upside. The bank believes the coming earnings season will decide whether positioning stabilises or unwinds further.
Source: InvestorsHub
Trading involves risk.
Risk Disclaimer
