The market that led the S&P 500 to one of its best November gains in 100 years is running out of steam. A Citigroup strategist expressed this view.
Futures flows have been “mixed” over the past week, with the net position in S&P 500 futures “moderately bearish,” according to Chris Montague’s team. The position in Nasdaq 100 futures is said to be neutral.
“The bullish signals from futures flows are fading as the S&P 500 gains for the fourth consecutive week,” Montague wrote in a note on Monday. “The first stage of the rally was accompanied by a significant unwinding of October’s short positions.” Since then, the newly added long positions have receded to an unnoticeable level.
The S&P 500 rose more than 8% in November, one of the biggest monthly gains since records began. However, the past few days have stalled. Investors are concerned about the health of U.S. consumers as the crucial holiday shopping season gets into full swing.
The index has gained more than 8% fewer than 10 times since 1928 Source: Bloomberg
S&P 500 Tracks One of Its Best November Gains on Record
Wall Street strategists are optimistic about the outlook for stocks in 2024. Strategists at Bank of America (BofA), Deutsche Bank and RBC Capital Markets expect the S&P 500 to hit a new record high as recession fears fade. This is in contrast to this year, when rising interest rates were expected to trigger an economic contraction and hurt the stock market.
Citi’s Montague said there is still room for stocks to rise further through the end of 2023 as losses on short futures positions widen and liquidation becomes more likely.
Original title:Citi’s Montagu Says Sharp US Stock Rally Is Running Out of Steam(excerpt)
2023-11-28 12:48:09
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