Tech Stocks See Highest Bullish Bets In 3 Years, Citi Analysts Highlight 'Increasingly One-Sided' Market
Tech stocks are seeing a surge in bullish bets, reaching the highest levels in three years, according to Citigroup analysts. This trend is more pronounced in the US but is also evident in the global market, particularly in European equities. However, there is a risk of a sudden market pullback if investors decide to cash in their profits. The bullishness in the tech sector comes amid a cautious shift in sentiment on Wall Street, despite record highs in the Nasdaq and S&P 500.
The tech sector is witnessing an unprecedented surge in bullish bets, with the highest levels in three years, according to analysts at Citigroup. However, chances of a sudden pullback from investors also loom large.
What Happened: Citigroup’s Chris Montagu, in a recent note to clients, noted a remarkable surge in long positioning in Nasdaq 100 futures, indicating an “increasingly one-sided” market. This follows the release of the personal consumption expenditures (PCE) report, reported Business Insider on Wednesday.
“Our model signaled some profit taking pre PCE release before risk flows returned. Weekly ETF flows were more constructive, with levels rising, and both futures and ETFs now indicating extended levels of bullish positioning,” Montagu said.
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This market trend, while more pronounced in the U.S., is also evident in the global market, particularly in European equities. However, this could pose a risk of a sudden market pullback if investors decide to cash in their profits.
Why It Matters: The bullishness in the tech sector comes amid a cautious shift in sentiment on Wall Street, despite the record highs achieved by the Nasdaq and S&P 500 last week. The recent buoyancy in the cryptocurrency market has also influenced the stock market’s risk-on mood.
Meanwhile, Bank of America’s equity strategist Savita Subramanian has revised the S&P 500’s year-end target to 5,400, indicating a modest 5% upside potential. Despite this more positive outlook, there’s an acknowledgment of the market’s sentiment improvements, introducing a layer of uncertainty in the near term.
Bank of America also raised its S&P 500 price target to 5,400, predicting a near-term pullback before the market resumes its rally. This new forecast represents a 13% gain for the entire year.
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