Investing.com–Investor positioning on U.S. stocks remained largely bullish as the rally on Wall Street showed little sign of stopping, while positioning on European stocks reflected continued bearish sentiment, Citi said in a note.
Investors continued to build long positions in US stocks, with Wall Street benchmarks showing extended bullish positions and posting the biggest gains among their global peers.
“The US stock markets are now the top three most comprehensive markets. However, the gradual build-up of positioning means that average profit levels are still modest,” Citi analysts wrote in a note.
Wall Street indexes rose sharply in November after Donald Trump won the 2024 presidential election, with investors positioning themselves for more expansionary policies and tax breaks under Trump.
The rally on Wall Street in recent sessions has also been driven by continued strength in heavyweight technology stocks, while expectations of a rate cut in December kept stocks bullish.
On the other hand, positioning in European markets, especially in the Eurostoxx, remained net short, with 100% of long positions losing, Citi said. The gap in positioning between the US and European markets also steadily widened.
Citi noted that French political turmoil, which could see the collapse of the French government, would likely do little to discourage bearish attitudes toward European markets.
But the brokerage noted that some long position had been attracted in Germany, while flows into Germany also appeared to be moving from bearish to neutral.
