Citi Warns U.S. Equity Positioning May Face Further Pressure

Citi says the recent selloff in AI and technology shares has materially weakened investor positioning across global equities, with U.S. markets still vulnerable to further de-risking. The bank sees the Nasdaq as the most damaged, as long holders are now underwater and positioning has fallen to a one-month low due to long liquidation and fresh short selling. The S&P 500 has also seen reduced exposure as investors unwind longs, while European markets have turned more defensive, especially the DAX, and Asia remains under pressure with South Korea’s KOSPI flagged as vulnerable to more deleveraging. Citi notes that crowded bearish positioning could set up short-squeeze rebounds if sentiment improves or macro data surprises positively. The next major catalyst is earnings season, which will help determine whether positioning stabilizes or another wave of selling follows.