Bullish positioning for both the S&P 500 and Nasdaq continued to decline last week as mounting policy risks and signs of a slowing U.S. economy amplified investor anxiety, according to Citigroup. The S&P 500 experienced a near $18 billion decline in notional positioning—one of the largest negative weekly flows in the past three years—while the Nasdaq and Russell 2000 also saw shifts toward a more cautious stance.
Negative Flows Across U.S. Indexes:
Citigroup noted that the latest weekly activity was predominantly characterized by new short positioning. The S&P 500 saw a mix of long unwinds and modest short covers, resulting in nearly neutral net positioning. In contrast, the Nasdaq’s bullish positioning remains moderate, and the Russell 2000 has shifted to a slightly bearish stance.
Gloomy Sentiment in Growth Stocks:
Strategists led by Chris Montagu observed that loss levels are greatest for the Nasdaq, with all long positions currently offside and an average loss exceeding 4.4%. Montagu added,
“A recovery rally back to 21,300 could see some stabilization of this risk but there seems limited evidence of a potential catalyst for this.”
Macro-Economic and Policy Uncertainty:
The decline in bullish positioning has followed growing economic uncertainty driven partly by policy risks and recent macro-economic releases that indicate a potential softening in U.S. economic growth.
In Europe, investor positioning for EuroStoxx and DAX has moderated over the past two weeks. While EuroStoxx remains moderately bullish, the DAX has seen a more rapid easing, reflecting a cautious outlook among European investors amid global uncertainties.
For those looking to monitor these trends and gauge the impact on market sentiment, Financial Modeling Prep provides valuable tools:
As investor sentiment shifts amid persistent policy uncertainty and softer economic signals, these evolving positioning trends may signal caution ahead. Monitoring these key indicators and leveraging data-driven insights can help investors navigate the current market environment.
