Strategists at Citigroup said Tuesday that U.S. stocks have a chance for a further rally as indicators point toward sustained interest in riskier investments and current market positions are not seen as overextended.
Strategists observed a decline in investor optimism in mid-March, but noted a pickup in investment flows in the past week.
Investors added $16 billion in new long positions in S&P 500 futures last week, while exchange-traded funds (ETFs) saw net inflows.
Furthermore, they highlighted that market positions are not historically overexposed, which supports the potential for continued positive market trends.
“The positioning is not forced relative to history, which means the current trend can continue in the coming weeks.”
Elsewhere, strategists have observed improvements in European market sentiment in recent weeks, with positioning in the Euro Stoxx 50 showing a slightly more bullish bias compared to the US market.
“The positive sentiment continued with over $2 billion in new long positions over the past week and ETF inflows,” the team noted.
In China, investor sentiment was more divided, with the Hang Seng bearish at -1.1, while the FTSE China A50 enjoyed a bullish outlook at +1.8. The A50 has been gaining positive momentum recently and steadily over the past month.