Long “painful” positions; FOMC Report Could Cause Trouble By Investing.com


By Senad Karaahmetovic

A Citi strategist has noted a moderate addition of bearish positions after another windy reading of the US.

New “painful” long positions have been added, which could see an accelerated market sell-off following the FOMC announcement, the strategist warns.

“There are signs that investors were caught up in new long positions when the market fell again last week. The new large long positions were added to December contracts without being offset by expiring contracts. These painful long positions may still be in play and at risk if the market falls further after the FOMC meeting,” the strategist says in a note to clients.

The sell-off reflected in the IPC has led to an average loss of 4% in the long position and more than 5% in the case of the , adds the strategist.

“If the market falls further, these positions could be forced to unwind and create a short-term bearish bias in the markets.”

Turning to Europe, the strategist notes that net short positioning “is not as bearish as it seems.”

“It has materialized as a result of offsetting long positions being closed out and in recent weeks have only seen small new short positions and no exits in ETFs. The is the most widespread long position following the good performance of local currency, but ETF exits speak to a more cautious outlook in the medium term,” adds the strategist.

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