Citi pointed out on October 27 that shorting positions in US small-cap stocks are still close to the highest level in history. Once favorable news comes out, it may trigger large-scale short back-up and drive a rapid rebound in stock prices. The bank said that bearish positions in the Russell 2000 Index are already at an extreme level in history, and a large number of shorters are still making considerable profits. If market sentiment improves, these investors may concentrate on buying back stocks and closing positions, further amplifying the increase. Over the past week, global investors have generally cut their stock positions and increased their shorting bets. Among them, bullish positions on the NASDAQ index have declined markedly in the past two weeks, but overall, they have remained net long. The previous trend of capital inflows in the European market was reversed. The British FTSE 100 Index turned net short, and short positions in the German DAX and European Stoxx Index increased; the bearish sentiment in the Asian market was even more prominent. The short positions of the Hang Seng Index and the Korea KOSPI Index were both close to historical extremes. Citi believes that the current market sentiment is still pessimistic, but short trading is too concentrated, which also means that once favorable, the stock market may experience a larger rebound.

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