(Bloomberg) — The post-election rally in US stocks could run out of steam as investors start to take profits, according to strategists at Citigroup Inc.
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Investors added to bullish bets last week, pushing exposure to the S&P 500 (^GSPC) to the highest level in three years, the strategists led by Chris Montagu said. Long positioning in the technology-heavy Nasdaq 100 (^NDX) and the small-cap Russell 2000 (^RUT) also reflect “an extremely bullish outlook.”
“Profits are elevated for both S&P and Russell and this could lead to near-term profit-taking, which may limit further upside,” Montagu wrote in a note dated Nov. 11.
The S&P 500 hit a record high last week on optimism that President-elect Donald Trump’s “America First” proposals would benefit domestic assets. The so-called Trump trade has also boosted small-cap stocks, which are likely to be supported by his protectionist stance.
—With assistance from Sagarika Jaisinghani.
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