Live Markets: Early signs of positioning fatigue

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19/05/2026 12:25

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EARLY SIGNS OF POSITIONING FATIGUE

Markets have been quick to reverse the Iran war-led selloff, particularly in the U.S. where major markets are at record highs, but Citigroup says positioning is now showing early signs of fatigue.

"US Investor flows were mixed over the week," Citi analysts led by David Chew say in a note.

"While new risk flows for the S&P 500 continued to drive positioning higher, the rise in bullish levels was limited due to offsetting profit taking activity."

According to Citi, Russell 2000 flows were mixed as a blend of push/pull from risk flows and new shorts left net positioning near neutral over the week, a concerning signal.

"The divergence between weaker Russell 2000 positioning and the more resilient large cap positioning further demonstrates the ongoing breadth imbalance and the fragility underpinning the recent rally," Citi says.

For Europe, bearish positioning continues to rise, with positioning now near the lowest level in three years, Citi adds.

"The energy shock and its associated inflationary pressures are expected to have a more pronounced impact on Europe than on the US and Asia," they say.

Chart r
eprinted with permission of Citi Research. Not to be reproduced

(Samuel Indyk)

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EARLIER ON LIVE MARKETS:

SOCGEN STICKS TO OVERWEIGHT CALL ON SMALL-CAPS  CLICK HERE

IN EUROPE, 'THE PESSIMISTS ARE BACK' CLICK HERE

ROBOTS MAY HELP OFFSET CHINA'S LABOUR SHORTAGE- BARCLAYS  CLICK HERE

CENTRAL BANKS LIKELY TO TIGHTEN EVEN WITH PEACE DEAL CLICK HERE

LOOKING ON THE BRIGHT SIDE CLICK HERE

EUROPE BEFORE THE BELL: WATCHING THE NEGOTIATIONS CLICK HERE

MARKETS IN UNEASY CALM AS INFLATION FEARS TAKE ROOT CLICK HERE

Chips ahoy https://www.reuters.com/graphics/USA-STOCKS/WEEKAHEAD/zdpxgeewmvx/chart.png

G7 bond yields https://www.reuters.com/graphics/AUTOMATED-20260518/G7-BOND-YIELDS-SINCE-2008/dwpkybegmpm/chart.png

European optimism https://www.reuters.com/graphics/GLOBAL-STOCKS/zgpolxnmqvd/chart.png

citi stoks https://fingfx.thomsonreuters.com/gfx/mkt/movaoaqqbva/Pasted%20image%201779186427470.png