Investing.com — The rally within the S&P 500 has coaxed many into chasing the market larger, taking futures positioning within the index to excessive bullish ranges and doubtlessly limiting the markets upside over the approaching weeks, analysts at Citi mentioned in a current notice.
“S&P 500 positioning may be very one-sided prolonged bullish with notional ranges at extremes,” Citi analysts mentioned. The current flows into equities which were chasing the rally suggests “it is arduous to explain traders as being at present ‘underneath invested’ in S&P 500 which can restrict the market’s upside over the approaching weeks,” the analysts added.
futures positioning is “at present on the a hundredth percentile and successfully one-sided web lengthy,” the analysts mentioned, creating a “extra uneven threat profile, the place an unwind of such giant positions may add to market volatility.”
Traders acquired a way of this volatility final week. The current S&P 500 pullback left a few “third of positions in loss,” the analysts mentioned. The acute bullish bets seen within the S&P 500 has additionally been noticed within the iShares ETF (NYSE:), which is the second most prolonged market after the S&P 500.
The , nonetheless, seems extra neutrally positioned, with the lengthy place dimension on the ninetieth percentile and the brief facet at a 3-year excessive. This positioning setup, the analysts warn, “creates unwind threat in both course that may amplify near-term market strikes” for the Nasdaq.
“If markets dump a big group of lengthy traders should cowl losses and lengthen the sell-off near-term, however equally a brief squeeze may amplify and additional rally,” they added.
