Citi analysts told investors in a note Tuesday that bullish momentum has waned as investors close out profitable futures positions.
"Despite the recent unwind, U.S. markets remain extended long but with moderating profit levels and near-term positioning risk falling," the analysts wrote.
"Despite European markets finishing up for the week, new risk inflows were limited; activity was more led by de-grossing. Current positioning in Europe is mixed, with risks falling from smaller positioning and P&L levels," they added.
Focusing back on U.S. equities, they explained that profit-taking led most of the activity for the S&P last week, with over $10.7 billion in long positions closed out.
However, they noted net futures positioning is still extended long and one-sided from a build-up in notional levels that has developed since March.
"Overall positioning risk remains elevated and of concern with notional levels still near long-term highs if the current economic and earnings outlook were to abruptly surprise to the downside," they concluded.