A large volume of long positions in US stocks already experiencing losses could lead to increased market pressure, Citigroup strategists said in a weekly note.“Long unwinds on the S&P have mainly been profit-taking transactions, but the remaining longs now are on average 0.8% in loss,” they wrote.
“Should the market turn negative the move could be faster and larger due to the large, long positions already in the red,” added analysts.is deteriorating more gradually compared to the US, but the trend is not optimistic, as the recent activity has largely involved establishing new short positions and closing long positions. Meanwhile, exchange-traded fund inflows remained strong.
In China, the market sentiment is similarly bearish, with significant negative flows in A-shares and many existing long positions incurring losses, suggesting that bearish momentum could intensify moving forward.
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