Investing.com – U.S. stocks are near all-time highs and Citigroup sees potential for further gains as investor sentiment grows more bullish while positive flows in Europe stall.
Rates and rates soared to record highs last week, and Citi sees potential for further gains based on new risk flows, the bank said in a May 20 note.
“Bull positioning levels for the S&P and Nasdaq continue to rise,” the bank said, as “last week’s activity was driven by an increase in new risk flows,” with S&P noting that $17 billion of new risk flows were added last week .nominal assets.
“This makes the S&P index broad and almost exclusively one-sided. However, profit levels are just beginning to emerge, which limits positioning risks,” the bank added.
The same degree of confidence was not reflected in Nasdaq flows – despite the increase in long positions, net notional levels remain close to neutral and have changed little in recent weeks.
Flows into the Nasdaq, while positive, have been small and come after a recent period of rapid devaluation. The net notional figure, although small, indicates continued but limited optimism.
In Europe, positioning dynamics appear to be weakening in Europe, Citi noted.
“The notional levels of the EuroStoxx and NYSE indices fell, while Eurobanks remained flat,” Citi added. “Eurobanks remain the most broadly expanded of the indices we track and pose the greatest positioning risk.”