Equities short-term positioning risks reduced, claim Citi analysts
Citi analysts said in a note Tuesday that over the past month, positioning across markets has become long and, in some cases, extended.
Even so, the analysts explained that profit-taking accelerated in the past week, with net notional positions falling for all markets, bar the Nikkei.
«Weekly flows show this was driven mainly by long covering rather than new shorts,» they said. «The net effect is that net long positioning for markets has moderated, and the implied P&L from these positions has fallen substantially.»
As a result of the «orderly position trimming,» the analysts claimed that some of the short-term positioning risks have been reduced, something investors have been worried about in recent weeks.
«This puts markets in a good set-up to make new gains or weather negative news/shocks in the coming weeks,» they added.
Focusing on US equities, the analysts said net long US equity positions have fallen over the past week, mainly due to profit taking, with SPX long positions falling from $77bln to $70bln with «no material change in open shorts.»
Furthermore, they said, «The P&L for both SPX and NDX positions has also fallen substantially to being marginally positive from what they have been over the past weeks.»
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