In their new weekly update, Citi strategists have observed a growing bullish sentiment in global equity markets.
Specifically, their analysis reveals that sentiment in all but three of the markets surveyed is above the 85th percentile, indicating a strong consensus towards bullish positions, which have become increasingly one-sided as recent capital inflows further amplify these trends.
Meanwhile, across all markets, shorts are now “entirely unwound,” leaving only one-sided net long positions. Where short positions still exist, they are universally “in the red,” the team noted.
In the US, the S&P has shown consistent bullish momentum, which notably accelerated last week, signaling a definitive upward trend, while Nasdaq\'s bullish positioning is extremely high, at the 99th percentile, despite mixed ETF flows.
In Europe, the DAX index stands out as the second most overstretched, with significant new long positions emerging over the last week.
“The momentum is stronger than in Eurostoxx futures, but net positioning is extended in both markets and profits on Eurostoxx average 7%, which raises the risk of rounds of profit taking,” the strategists noted.
As for Asia, Nikkei long positions have accumulated an average profit of 12%, with overall profits standing at +5.0 when normalized, the highest among its peers, due to investors joining the rally early.
At the same time, momentum in China\'s A50 positioning is on the rise, whereas the Hang Seng continues to show a negative trend.
“To feel more confident in the China trade, we would like to see Hang Seng positioning catch-up – it is definitely heading in the right direction,” said analysts.
The Hang Seng, KOSPI, and FTSE 100 are the sole indexes still holding net bearish positions.