Last week, most major equities markets saw an increase in short positions amidst general declines, although the ongoing bearish trend is showing signs of slowing down, according to analysts at Citigroup.
The net short position for S&P 500 Index futures saw a slight increase, rising from $27 billion to $32 billion. This change was accompanied by an increase in gross exposure, with new long positions being added alongside new short positions.
In the analysts' note to clients, they note that overall positioning seems to have reached a bottom.
“The question though is whether the recent pullback is enough for investors to reestablish new longs or at least cover shorts,” the strategists wrote.
Without a clear catalyst, such as a significant drop in yields, and with increasing geopolitical risk, the 2.5% decline in the S&P last week may not be compelling enough for investors to reenter the market enthusiastically, they added.
New short positions were also added to the total net short position for Eurostoxx, with these short positions being in the money. Investors in the FTSE 100 remain net long, but they are currently facing losses at current levels.
In Asian equities, positioning remains mixed and relatively light.