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Bullish flows for S&P 500 continue, but Nasdaq net shorts grow claims Citi

Published 07/02/2023, 13:18
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By Sam Boughedda

Citi analysts told investors in a note Tuesday that bullish flows for S&P 500 Futures continue, but momentum for the NASDAQ has reversed.

"Bullish flows for S&P 500 futures continue, with positioning and profits moderately rising," analysts said. "However, momentum appears to have reversed for Nasdaq, with net short positioning growing despite the underlying index rallying."

The analysts add that Nasdaq ETF positioning reflects an increasingly weaker medium-term outlook, with outflows accelerating, while in Europe, positioning activity was limited, with EuroStoxx and FTSE long positioning "marginally rising."

U.S. markets have rallied for the most part this year, although strong jobs data released last week has provided some uncertainty as market participants weigh up the potential for rates to continue moving higher.

"New long flows continue to dominate S&P 500 futures positioning, with +$5.9bn net new longs added over the week. Positioning is mildly bullish, and profit/loss levels are not extended," continued analysts.

"In Nasdaq, positioning activity has been more mixed despite the recent cash rally. Net positioning remains bearish with average short losses extended (-8.9%), elevating the near-term risk of a potential squeeze."

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