Citigroup Warning: U.S. stock market short-sellers are aggressively building positions, tech bulls remain at high levels, and major risk events are coming one after another.

```

Citigroup strategists have issued a warning that the US stock market is facing a fragile situation caused by multiple pressures: while traders are aggressively building short positions, bullish bets in the tech sector remain high, and in the coming weeks, inflation data, Federal Reserve rate decisions, and several giant IPOs are set to appear, making downside risks impossible to ignore.

The latest report by David Chew’s Citigroup strategy team points out that the Nasdaq 100 Index plunged nearly 5% in a single day last Friday, marking the biggest daily drop in 14 months, but this selloff only reset the overall investor exposure to some extent and did not fundamentally change the market structure.

Chew wrote: "Capital flows show that the market is diverging; recently, some are aggressively establishing short positions, while previously accumulated long positions are still ongoing. Bullish positions in the Nasdaq remain high; while the overall situation has improved, it is still prone to downside risk." This means that once imminent risk events trigger market disappointment, crowded long positions could spark large-scale unwinding.

Long positions remain elevated, downside risks skewed

Over the past few weeks, investors have continued to increase their positions in US stocks. Fast money asset managers such as Commodity Trading Advisors (CTA) and volatility control funds have rebuilt exposures by taking advantage of calmer market conditions, and news of a possible resolution to the Iran conflict has also boosted sentiment.

However, the Citigroup team noted that this rebuilding of positions has not eliminated latent risks. Chew wrote in the report: "Although some risk reduction has occurred, bullish positions in the Nasdaq remain high, and most longs are still profitable. This keeps downside risk skewed, especially with upcoming tech sector catalysts—any signal of disappointment could, given high profitability and crowded longs, trigger large-scale long unwinding."

Major risk events around the corner, market under pressure

In the coming weeks, US stocks will face a gauntlet of risk events.

The US CPI inflation data will be released this Wednesday, with the market closely watching its guidance for monetary policy.

More importantly, the Federal Reserve will announce its rate decision on June 17, which will be the first meeting chaired by the new chair Kevin Warsh, whose policy stance and communication style are under scrutiny.

At the same time, large-scale IPOs from SpaceX, Anthropic, and OpenAI will arrive in succession, directly testing the market’s appetite for further exposure to the artificial intelligence theme.

With tech sector long positions already crowded, the market response to these IPOs will be a key touchstone for investors’ risk preference.

European market structure relatively stable

By contrast, Citigroup’s team believes the overall structure of the European market is more stable.

The report notes that short positions in the blue-chip Euro Stoxx 50 index have been closed out, and regional benchmarks such as Germany’s DAX, UK’s FTSE 100, and the Euro Stoxx Bank index are gradually returning to neutral levels.

Chew stated: "The improvement in positions is reinforced by better profit/loss dynamics, reducing pressure on existing positions and creating a more constructive background for the market in the near term." This stands in stark contrast to the US stock market’s polarized positions and structural vulnerability.

Risk Warning and DisclaimerThe market carries risk; investments require caution. This article does not constitute personal investment advice, nor does it take into account the special investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their particular situation. Investments made accordingly are at your own risk. ```