Investing.com – US stock indexes are near record highs, and Citigroup sees potential for further upside as investor positioning has become increasingly bullish, while positive flows in Europe have stalled.
The and rose to record highs last week, and Citi sees opportunities for further gains based on new risk flows, the bank said in a May 20 note.
“Bullish positioning levels continue to rise for the S&P and Nasdaq,” the bank said, as “last week’s activity was led by increased new risk flows,” with the S&P seeing $17 billion in notional value added from new risk flows last week.
“This leaves the S&P comprehensive and almost exclusively one-sided. However, profit levels are only just beginning to develop, limiting positioning risks,” the bank added.
The same level of confidence was not reflected in Nasdaq flows – despite an increase in long positioning, net notional levels remain close to neutral and have only changed marginally in recent weeks.
Flows in the Nasdaq, while positive, have been small and emerge after a recent period of rapid de-bruising. The net theoretical figure, while positive, is small, indicating continued but limited optimism.
As for Europe, positioning momentum in Europe appears to be weakening, Citi noted.
“Notional levels fell for the EuroStoxx and , while the Euro Banks remained flat,” Citi added. “Euro Banks remain the most comprehensive index we track and pose the greatest positioning risk.”
