©Reuters.
Investing.com– Analysts at Bank of America said Commodity Trading Advisors (CTA) maintained long positions on stocks, as a brief dip on high inflation levels triggered further short buying over the past week.
BoFA analysts had expected some retreat in long positions following warmer-than-expected US inflation data last week. However, with both all-time highs remaining close, the stop loss/liquidation triggers have moved relatively further away, allowing for longer positioning in US equities.
“Our model triggers were at least another 2% away, and with both the S&P 500 and NASDAQ-100 returning to new all-time highs by Thursday, long CTA stocks likely remained essentially unchanged on the week.” BoFA analysts stated this in a note dated February 16th.
“At some point, these positions will likely unwind, gradually or sharply, but for the latter scenario, it may require a consecutive series of fundamentals-driven declines that could then overwhelm any subsequent buying on the dips.”
BoFA analysts also noted that CTA positioning has become shorter on US Treasuries. While short positions are expected to be largest on later-dated bonds, analysts said they expect more selling at the front of the yield curve.
Wall Street indexes closed lower on Friday after higher-than-expected U.S. inflation sparked more concerns about higher long-term interest rates. Stock futures fell in Asian trade on Tuesday.