Analysts at Citi have made a new forecast in a note delivered to their clients. According to the note, the current bullish momentum in the stock markets will eventually fade in the coming days.
In addition, they also commented on how there was a mix of bullish & bearish basis in the past week. This was an indication that the market had a limited direction to move.
Overall, the month of January was split into the bullish and the bearish phase. And if we look at the recent activity, it tells us that the bullish markets are running out of momentum.
However, the only exception that can be found in the EU banks where the future positions at record high levels. And if we look at the ETFs from the USA, consistent outflows have been recorded for the last 2 weeks. As a result, the positions are only a little net bullish, and the momentum continues to fade away.
Similarly, the analysts at the BofA also said similar things about the equities markets. According to them, the outflows were very much muted during last week. Another thing to note was the selling of single stocks and purchasing of ETFs by the clients.
According to the BofA, such behavior by the clients was seen for the first time in 2023! But considering we are only 1 month and a few days into 2023, that's not such a big thing after all!
However, we can't ignore the fact that the spread between the ETF outflows and the inflows of single stocks is at a record high.
Over all, it appears that the bullish momentum seen during the first few weeks of 2023 is now fading away. Perhaps it was the optimism that drove the market higher? Well, it seems that investors are now grounding themselves in the reality, and we are seeing it in the markets!