Citigroup strategists indicate that futures positioning in most markets, including Australia and Europe, remains bearish.
However, they note an exception in the case of U.S. equities, particularly the Nasdaq, where positioning has shifted back to neutral following a recent market rally.
“90% of $37.5bn shorts in SPX and all of the $9.7bn shorts in NDX are in loss. For Nasdaq the average loss is 5% and this adds bullish pressure from current positioning,” the analysts said in a client note.
“This means clear bullish pressure from positioning in the coming days where a short squeeze could drive further flow.”
According to the strategists, shorts are under pressure, and further unwinding of short positions could contribute to short-term market strength.
This projection suggests that market dynamics, particularly in the U.S., may be influenced by short-covering and a potential shift in sentiment.