Investors have been increasingly taking short positions in the Nasdaq 100 Index, reflecting rising apprehensions about the technology sector. These concerns have emerged due to the possibility of interest rates remaining high for an extended period, which could have a negative impact on the tech industry.
Earlier this year, the Nasdaq 100 experienced a significant surge, with a 45% increase that peaked in July 2023. However, following indications from the Federal Reserve that rate cuts were not on the horizon, the index has seen a 6.8% decline.
A report led by Chris Montagu at Citigroup reveals that current positioning in the Nasdaq 100 is heavily skewed towards net short at $8.1 billion, as investors have liquidated all long positions. This shift in investor behavior reflects a broader sentiment of caution prevalent on a global scale.
In contrast, S&P 500 futures have only shown a slight net short position and still maintain $15 billion in long positions. This suggests that while there is some pessimism among investors, it is not as pronounced as the sentiment towards the Nasdaq 100.
The attractiveness of the tech sector has also been affected by the rise in bond yields, contributing to the growing trend of short positions due to its high valuations. However, Montagu points out that net positioning across all markets is not excessively skewed, and profits or losses are not significantly large. This indicates that market positioning remains relatively cautious and aligns with the prevailing global bearish sentiment.