Citi says bullish flow support is returning to markets

Citigroup strategists observe a resurgence of bullish momentum in both U.S. and European stocks after two weeks of slowing futures flows.

The team notes that current flow momentum is strongly bullish as the year approaches its end, coinciding with significant economic releases and central bank meetings.

“Momentum in futures flows is back, especially in the latter part of last week. This follows on from weeks of limited momentum and leaves S&P net positioning neutral while Nasdaq is slightly bullish,” analysts said.

Eurostoxx futures positioning has become more net bullish than that of the US market in the past week.

“The bullish momentum is even stronger in which have had 8 consecutive sessions of new longs moving normalized positioning from +1.5 to +3.7.”

Conversely, net positioning on China A50 is reported to be the most bearish, experiencing a third consecutive week of unwinding longs and increased shorts, resulting in nearly one-sided net short positioning.