Citi: ‘Painful’ longs at risk as FOMC sell-off could trigger forced pullback

Citi: ‘Painful’ longs at risk as FOMC sell-off could trigger forced pullback

Written by Sinad Karahimetovic

A Citi strategist noted a mild addition to the bearish situation after another very enthusiastic US reading.

New “pain” longs have been added, which could see an accelerated market sell-off after the FOMC, the strategist warns.

β€œThere are signs that investors have indulged in recent new long positions as the market fell again last week. Large new long contracts have been added to the December contracts with no matching clearing of the expiring contracts. These painful long positions may It remains in place and is at risk if the market falls further at the FOMC meeting.”

The CPI sell-off has driven new longs to an average loss of 4% to over 5%, the strategist adds.

β€œIf the market falls further, these positions may be forced to pull back and create a short-term bearish bias in the markets.”

As far as Europe is concerned, the strategist notes that net short positions are “not as bearish as it seems”.

β€œThe result of the equivalent long closing has materialized, recent weeks have seen only new small sell trades and no ETF outflows. The FTSE 100 is the most long-term position after the strong performance of the local currency, but ETF outflows are telling us, the strategist added. Its a more cautious look on average than the turns.

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