Citigroup strategists, led by Chris Montagu, believe that U.S. technology stocks could experience further upside as traders forced to cover substantial short positions scramble to repurchase shares.

Neutral Positioning Leaves Room for a Squeeze

Citi’s positioning analysis revealed that both the Nasdaq 100 and S&P 500 were nearing neutral status. However, the Nasdaq carries a heavier legacy short exposure, indicating that losses on existing short positions may incite accelerated buying, driving additional growth in the index.

“The Nasdaq short positions have been losing for some time. Covering them could spur further upside,” the strategists noted.

Market Context for Tech Stocks

• Market Flow: Risk flows into the Nasdaq saw modest increases ahead of U.S.-China trade progress, yet overall enthusiasm for risk assets remained restrained.

• Common Setup: Major U.S. benchmarks exhibit above-average short interest, rendering them susceptible to quick reversals if market sentiment shifts.

Across Europe, ETF flows have shown resilience, particularly in the DAX and Euro Stoxx, although overall positioning largely remains neutral outside of continued bullish tendencies in European banking funds.

Monitor Active Stocks Today

To discover which tech companies and ETFs are currently seeing the most activity as shorts cover, investors can access real-time data on lead stocks and funds driving the short-covering rally.