Citi analysts said in their equity markets positioning model note Tuesday that there has been a step-up in bearish flows.
The analysts wrote that short positioning rose over the week, with both U.S. and European indices seeing increasingly pronounced new short flows.
"The rapid ascent of new shorts across S&P last week has driven net positioning to more neutral levels," said analysts. "Downside risks though appear contained for now with only a small build-up in long losses as indices have declined."
Citi said that in Europe, short positioning has also grown, but to a lesser degree than in the U.S. Focusing on the U.S., analysts stated that over $9 billion in new notional short positions were added to the S&P 500 last week, leading to a further decline in bullish positioning.
"In Nasdaq activity was more mixed, but the downward trend for bullish positioning remains consistent across US equities," analysts explained. "Long (S&P) average loss levels have not risen significantly even though nearly all positions are in loss. Still, there is increasing risk of unwinds should the current trend persist."