"Nearly 80% of long positions are in a loss! Citigroup warns: Nasdaq decline may not be over"

Citi Group said that due to the overall high level of risk exposure for investors in the US technology sector, this sector faces the risk of further decline. The team of strategists led by David Chew stated that this month's pullback in the Nasdaq 100 Index, which is mainly composed of tech stocks, did not come with a proportional reduction in long positions. In a report, David Chew wrote, "Compared to short positions, long positions in the Nasdaq are still significantly larger," "As nearly 80% of long positions are currently in a loss (trapped) state, the risk leans towards those longs at a loss, which may exacerbate further downside pressure." The Nasdaq 100 Index records its worst performance in June since 2022 This month, doubts about the overvaluation of artificial intelligence (AI) disrupted tech stocks, leading the US mega-cap stocks lower. The Nasdaq 100 Index's nearly 2% decline puts the index on track for its worst performance in June since 2022. Data from Goldman Sachs' prime brokerage business shows that hedge funds are aggressively cutting back on their risk exposure to US tech stocks, with last week's net selling reaching the highest levels in over a decade in both absolute and relative terms. The Citi Group team also noted that bearish fund flows are accumulating in the Nasdaq 100 Index and the S&P 500 Index, and investors are rotating into the Russell 2000 Index composed of small-cap stocks.