Investing.com Summary

S&P 500 positioning stabilized last week as investors digest ongoing earnings data and prepare for possible market volatility surrounding the upcoming US election, according to Citi strategists.

Citi's strategists, led by Chris Montagu, noted, "Putting it all together, risk flows over the last week, while positive, were rather subdued but kept net positioning for the S&P 500 net long and extended."

Meanwhile, sentiment for the Nasdaq is described as “increasingly constructive,” with positioning bouncing off a neutral level.

In Europe, the Euro Stoxx 50 index showed “fickle” positioning. Last week saw a shift from net short to net long, indicating positive momentum, but this trend weakened as the week went on. Investors appeared to take profits or reduce exposure, avoiding new long positions given modest profit and loss figures.

European bank positioning remains stable and net long but not overextended, which aligns with the sector’s fundamentals.

Regarding China trade, either directly or through the Hang Seng, two notable trends emerged:
1. Positioning in both markets has stabilized and is slightly more net long.
2. There is a noticeably stronger sentiment toward the Hang Seng compared to the China A50, with a preference for the former.

Montagu and his team explained, "Overall, this suggests that there is latent interest in China and that investors have perhaps reduced overweights/shorts following the stimulus announcement but are reluctant to take significant risks until more specific fiscal policy information is revealed."

In Asia, the S&P/ASX 200 continues to attract interest, while positioning in the Nikkei and KOSPI 50 remains largely neutral.