S&P 500 bears take a breather as futures positioning points to stabilization – Citi

Futures positioning in the showed minimal changes last week, signifying the conclusion of a bearish trend in the US equity market, as reported by Citi equity strategists.

The recent week’s developments further affirm a signal from the previous period, indicating a substantial decrease in bearish activity and the stabilization of the selloff that occurred in September.

“This marks an end to two months of persistent bearish momentum in US equities,” the analysts write in a note.

While positioning remains predominantly net short, it remained unchanged from the prior week. This trend contrasts with the negative trajectory observed over the past two months.

The flows of the also displayed a similar pattern, with a significant reduction in net bearish positioning and a slight pullback. Last week’s rallies were linked to a round of profit-taking on short positions, notes the strategists.

It’s worth noting that the S&P 500 achieved a four-day winning streak from October 6 to October 11, marking its longest winning streak since August.

In contrast, in the European markets, futures positioning remains notably net short across various markets, while ETF flows maintain a neutral to bearish stance.