Investing.com -- Positioning levels in US equities stabilized last week, reversing the decline seen since the start of the year, according to Citigroup (NYSE:C) strategists.
The S&P 500 experienced increased notional levels, driven by short-covering activity. This brought net positioning back to levels observed at the start of the year, which strategists described as "moderately bullish but also more one-sided."
Nasdaq and Russell 2000 positioning showed minimal weekly changes, with gains of +3.2 and +1.1, respectively. Both indices recorded mixed flows, leaving their overall setup largely unchanged.
Nasdaq positioning remains notably bullish, with long positions near the 97th percentile.
ETF inflows also pointed to robust bullish sentiment for both the S&P 500 and Nasdaq.
More broadly, US positioning trends align with longer-term fund flow patterns observed in Citi’s recent report on fund flows, suggesting that "equity investors appear to be unfazed (at least in the near term) by the looming uncertainty of a Trump administration,” strategists said.
In Europe, most indexes saw an uptick in net positioning, with the EuroStoxx index posting the largest weekly increase. This was attributed to a combination of new risk flows and short-covering activity.
Citigroup noted that short positions in the region are “completely offside for all indexes,” with EuroStoxx standing out due to elevated short notional levels and significant losses of -4.6%.
"This increases the likelihood of potential force unwinds which could support the market at current levels,” Montagu and his team explained.
Elsewhere, Japan’s Nikkei remains the only index with a net long and bullish stance, gaining +1.5. However, bullish momentum has slowed recently due to unwinding of long positions.
Meanwhile, the Hang Seng index recorded the largest improvement in net positioning in the Asia region, with a +0.6 rise, reversing prior bearish sentiment.
China’s A50 index also showed marginal gains in positioning, though neither the levels nor momentum suggest a significant shift in sentiment toward Chinese equities as a value play.