Equity Markets Positioning Model: Rebuild continues for Europe, KOSPI capitulates

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Equity Markets Positioning Model: Rebuild continues for Europe, KOSPI capitulates

Equity Markets Positioning Model

03 August 2026 Citi Research

Current Themes

Global equities experienced another volatile week, although US large caps

ultimately managed to grind higher and extend recent gains. Small caps were

broadly unchanged. Investor focus continues to centre on the tension between an

ongoing AI infrastructure spending cycle and increasing scrutiny around the timing

and magnitude of the eventual return on investment. Recent market moves have

largely reflected this dynamic.

However, beneath relatively resilient index-level performance, factor dynamics

point to a meaningful rotation away from crowded Momentum exposure towards

Value (Global Quantitative Insights: The Momentum Sell-off: Style Rotation or

Crowded Unwind?). Positioning activity across major US equity indices was mixed

last week. S&P 500 futures saw a modest increase in short activity, while net

positioning across both Nasdaq and Russell 2000 markets was broadly

unchanged. Outside of the pickup in S&P short flows, weekly positioning data

provided limited evidence of a meaningful improvement in investor conviction.

On a long-term normalised basis, S&P 500 positioning declined further to -0.6 and

now sits in mildly bearish territory, while Nasdaq positioning moderated back

towards neutral. Russell 2000 (+3.7) positioning continued its gradual

deterioration. Taken together, the data suggest that while equity markets have

remained resilient through a strong earnings season, underlying positioning

remains far from supportive and continues to signal a degree of investor scepticism

beneath the surface of recent price strength.

Figure 1. S&P 500 risk flows offset by increased short Figure 2.