Citi strategists note increased long positioning in US equities, pressuring short sellers amid elevated losses on S&P 500 shorts.
Investors are rebuilding long positions in US equities, reducing bearish bets and increasing exposure to potential short squeezes. Citi strategists report that positioning across major indices, including the Nasdaq and S&P 500, has shifted to net long as new buying outpaces short covering.
The improvement in positioning is most pronounced in the Russell 2000, which remains the most extended index. Meanwhile, average losses on S&P 500 short positions have risen, leaving short sellers vulnerable to forced covering if markets continue to climb.
A sustained rally could trigger further buying as short sellers rush to close positions, potentially accelerating upward momentum in equities.