Citi Analysts Warn on U.S. Equity MarketsnnCiti analysts caution that U.S. equity markets remain "extended and bullish," despite recent declines following the Federal Reserve's cautious stance on 2025 rate cuts.nnIn their latest Equity Markets Positioning Model note, Citi observes that the S&P 500 (+3.1) and Nasdaq (+4.0) futures positioning levels have slightly eased but remain firmly in extended territory.nnDespite a minor uptick in short positioning last week, analysts highlight that this shift has not significantly impacted the strong bullish sentiment surrounding these indexes.nnThey noted, "The overall net impact was limited," emphasizing sustained optimism in U.S. equities in comparison to other regions.nnThe report also points to a contrasting scenario in global markets. European equities exhibit increasing bearish trends, with consistent rising bearish flows across indexes, such as EuroStoxx, where positioning has turned moderately bearish. Similar tendencies were noted in ETF flows, indicating declining investor confidence in Europe.nnIn Asia, positioning remains relatively neutral but trends bearish, especially for China A50 and Hang Seng futures, driven by increased short positions and an unwinding of longs as year-end approaches.nnWhile U.S. equity markets show resilience, analysts warn of potential downside risks for smaller-cap benchmarks like the Russell 2000, which experiences neutral positioning but rising long losses.nnIn conclusion, the report suggests a clear preference for U.S. equities, which stands in contrast to the extended bearish sentiment in MSCI Developed Markets excluding the U.S., where short positioning has reached a three-year high.