Chris Montagu, Citi strategist, took notice of investor positioning which may indicate that the US stock markets are in better times.

“Bearish investor repositioning and ETF outflows have slowed following the record shift and flows before Easter,” which may signal that “we are near peak investor bearishness across equity markets, though there are not yet any bullish reversals,” Montagu said in a client note.

After the previous week’s record of $25.5 billion, ETF outflows have slowed down to $2.5 Billion. A strategist believes there could be an increase in the tendency to unwind large short positions

“With three weeks of sell-offs, profits on the short positions have built to an average 3.7% with some recent positions holding nearly 7% profits. Consensus is high in positioning with 5 to 1 shorts vs longs and an eventual unwind of the shorts (profit taking) would provide material support for the market.”

Europe has a different situation. Bearishness has not changed in Europe.

“Eurostoxx 50 futures positioning is steady bearish, with most shorts established in early March. These positions are in large part at loss. Meanwhile, investors have extended the net long in futures, which is now the most extended since Sep-20,” the strategist added.

By Senad Karaahmetovic