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Investing.com -- Nasdaq positioning has become increasingly stretched, raising near-term risks of profit-taking, according to Citigroup (NYSE:C) strategists led by Chris Montagu. Amid a strong bullish momentum, U.S. equity markets continue to attract new long positions, particularly in the tech-heavy Nasdaq 100.
The bank’s positioning model places Nasdaq at the top of its global equity ranking, with a normalized score of +4.6 for positioning and +4.0 for Profit and Loss (PnL), both near the upper bounds of Citi’s scale.
Weekly activity in U.S. equities was “almost exclusively one-sided,” strategists note, as investors continued to build risk exposure.
Net gross positioning in the S&P 500 also rose, while Russell 2000 futures followed with a high percentile ranking. However, Nasdaq futures showed the highest net long notional at $37.5 billion, ranking in the 99th percentile for long exposure.
While the U.S. remains firmly bullish, Citi points out diverging trends elsewhere. In Europe, investor positioning remains neutral, with the FTSE 100 seeing reduced bullishness for a fourth consecutive week.
European Banks, however, maintained moderately positive levels.
In Asia, positioning in the KOSPI and China A50 also picked up, with China A50 registering the largest one-week change in net positioning among tracked indices.
However, Citi flagged that KOSPI’s profit levels are stretched on a three-month basis, suggesting higher downside risk.
The report comes ahead of potential market-moving developments, as the U.S. tariff pause is set to expire this week. While Citi foreign exchange (FX) strategists view a 10% U.S.-EU tariff rate as the base case, risks to the outlook remain tilted to the downside.
“Despite on-going global trade uncertainty, investors continue to open new long positions in the major U.S. indices,” Citi said.
But as Nasdaq positioning hits extreme levels, Montagu and his team caution that investors may begin locking in gains.