Bullish Positioning in the US Gains Momentum

Investing.com — Bullish positioning in the US continues to gain momentum, despite a mixed macro backdrop, according to Citi strategists.

Recent payroll data indicates a weakening trend in labor markets, which Citi's economists suggest could prompt the Federal Reserve to consider more rapid and significant rate cuts.

Risk flows were particularly evident in the Nasdaq and S&P, with Nasdaq showing the largest week-on-week positioning change among the monitored indexes. Long positions on both S&P and Nasdaq have reached three-year highs, reflecting extended bullish sentiment.

Exchange-traded fund (ETF) flows have aligned with these trends, signaling a consensus among both short- and long-term investors.

"S&P positioning is asymmetric and one-sided long, whereas Nasdaq short positioning has marginally declined below longer-term averages," Citi strategists led by Chris Montagu said in a note.

"Nasdaq short losses are -2.4% on average, with short positioning falling in a narrow band just above 21,050. At this juncture, losses are moderate, but continued market momentum could drive increased unwind risks and lend support to the index."

In contrast, Russell 2000 positioning remained relatively flat throughout the week, highlighting the selective flow patterns seen across US equities during that period.

In Europe, investor behavior appeared resilient despite recent political instability in France. Positioning levels for EuroStoxx 50, DAX, and European banks increased, driven primarily by new long positions. This follows earlier signs of investor interest slowly returning to European markets.

Recent activity has reinforced this trend, with EuroStoxx's bearish positioning rebounding from recent lows.

Lastly, bullish positioning for Asia’s Hang Seng and A50 futures gained traction last week, even before the Politburo's recent policy support signals.

KOSPI positioning remained relatively stable, with investors maintaining a mildly bearish stance.

Meanwhile, Nikkei positioning showed a rise in bullish sentiment, unaffected by recent regional political developments.