Short Squeeze Threat Looms as Traders Face Bearish Bets
Traders navigating bearish bets in the US stock market face the looming threat of a short squeeze, according to Citigroup Inc. strategists. The positioning in the US equity benchmark remains mildly net long, mirroring levels seen at the start of December. Citigroup strategists highlighted that remaining shorts are gradually accumulating losses, and a potential short squeeze looms if the market extends its upward trajectory.
US Stock Market Could Experience Short Squeeze, Says Citi
Citigroup Inc. strategists have warned that the US stock market could experience a short squeeze. The positioning in the US equity benchmark is currently mildly net long, which mirrors levels seen at the start of December. However, Citigroup strategists have pointed out that remaining short positions are gradually accumulating losses. This raises the possibility of a short squeeze if the market continues to rise.
Citigroup Warns of Potential Short Squeeze in US Equities
Citigroup Inc. strategists have issued a warning about a potential short squeeze in US equities. They noted that the positioning in the US equity benchmark remains mildly net long, similar to levels observed in December. However, the strategists highlighted the gradual accumulation of losses among remaining short positions. This suggests that a short squeeze could occur if the market continues its upward trajectory.
Nasdaq’s Extended Bullish Positioning Raises Short Squeeze Concerns
The Nasdaq, a prominent US stock index, is showing extended bullish positioning, according to Citigroup Inc. strategists. Despite comparable performance to other indices, the Nasdaq has become the third most extended in terms of bullish positioning. However, the strategists noted that the current levels of exposure have minimal profit and loss implications. Nevertheless, the extended bullish positioning raises concerns about the potential for a short squeeze if the market continues to rise.
European Equities Seeing Most Extended Bullish Positioning in Years
Citigroup Inc. strategists have observed the most extended bullish positioning in European equities since April 2019. This suggests that investors have become increasingly optimistic about the prospects of European stocks. The extended bullish positioning indicates a higher level of confidence in the rising trend of European equities. However, this also raises the possibility of a short squeeze if the market continues its upward trajectory.
Analyst comment
Neutral news: Traders are facing the possibility of a short squeeze in the US stock market. The market is currently mildly net long and remaining short positions are accumulating losses. If the market continues to rise, a short squeeze could occur.
Market Analysis: The market may experience increased volatility as traders with bearish bets face the risk of a short squeeze. If the market continues its upward trajectory, remaining short positions could be forced to cover, driving prices higher. Investors should monitor market conditions closely.
