Live Markets: Caution! S&P positioning has become 'stretched'

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22/10/2024 13:05

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    CAUTION! S&P POSITIONING HAS BECOME 'STRETCHED'
    US elections are fast approaching and Wall Street is heading
into the Nov. 5 vote just a handful of points below the latest
record peak set this month, following a 22% surge this year.
    Beneath the surface of buoyant markets, however, there are
signs that suggest some caution. Citi sees risks emerging as
positioning on the S&P 500  .SPX  has now become "stretched".
    "Net long position for the SPX is at levels not seen since
mid-last year...  The last time market positioning was this
stretched, the SPX pulled back by a little over 10% for the
subsequent 2-3 months," say strategists at the US bank.
    "We're not suggesting investors should start to reduce
exposure, but the positioning risks do rise when markets get
extended like this," they add in a note.
    That being said, Citi says that unrealised profits are "by
no means" stretched. This suggest "less capital at risk and
therefore less motivation to cover if markets pull-back".
        
    (Danilo Masoni)
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    FOR TUESDAY'S OTHER LIVE MARKETS POSTS
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