Source: Jin10 Data
Author: Xiao Yanyan

As bearish positions surrender and bullish sentiment drives the record-breaking surge in US stocks, the position of bullish US stocks has reached a historic high.

Citigroup strategists say the position of the S&P 500 index is "completely one-sided", as bears retreat, bullish positions hit a new high. This refers to the proportion of investors "callining" the S&P 500 index, which is the ratio of investors betting that the market will continue to rise to those holding the opposite view.

Analysts led by Chris Montagu wrote in a report on Monday: "The position in the S&P 500 index hit a new high for the fourth consecutive week, with more and more bears surrendering."

Therefore, among the major stock average indices mentioned in the analysts' report, the increase in the US stock index is the highest. Analysts say this has made it even more difficult for the remaining bears.

They wrote: "The three major US markets are currently the longest bullish period and the most profitable markets in the report. As we said last week, contrarian traders have not been rewarded."

This analysis comes amidst the continued rebound of the US stock market this year, with investors' sentiment soaring. The S&P 500 index has risen by 28% so far this year.

Trump's victory in the election is expected to bring about stronger business activities and profit growth with the proposed corporate tax cuts and relaxed regulatory measures.

Analysts say that investors' preference for US stocks has exceeded their preference for international stocks, accelerating the rebound of US stocks and widening the gap between net positions in the US market and the European market.

The long position of the S&P 500 index is in stark contrast to the short position of the Euro Stoxx index, with the latter being in a net short position for several consecutive weeks, and all long positions are in a loss, analysts said. They also said, "The gap in positions between the two regions will only continue to widen."

In recent weeks, investors have been bearish on European stocks. Citi stated that due to the potential further disruption in the French political landscape, investors' sentiment may remain unchanged.

Since reaching its peak in September, European stocks have been trailing behind due to concerns about potential US tariffs, geopolitical risks, and regional economic slowdown. Political turmoil in France has heightened these worries, with French lawmakers scheduled to hold a vote of no confidence on Wednesday.

Calculated in US dollars, the performance of the European benchmark Stoxx 600 index this year has lagged behind the S&P 500 index by over 25 percentage points, marking the largest performance gap in this century.

However, Citigroup's strategists say that the current loss positions suggest a low risk of forced selling of European stocks. Ulrich Urbahn, Head of Multi-Asset Strategy and Research at Berenberg, said he recently increased his investments in European stocks as he believes the bear market has been priced in. He said, "Given the pessimistic positioning, rebalancing of funds, hopes for the German elections and Chinese macro data, weakening euro, and the potential resolution of the Ukraine conflict, European stocks have potential until February next year."

Editor/Jeffy