Citigroup strategists believe that the sell-off experienced by the US stock market last week may have caused major stock indexes to fall further.
Strategist Chris Montagu and others said in a report to clients on Monday that the large number of long positions closed in the S&P 500 index and the increase in short positions in the NASDAQ 100 index all indicate a shift in risk appetite to a more direct bearish trend.
They said that hedge funds' risk reduction operations in the S&P 500 index made total exposure only half of the peak in mid-July.
Potential long closing pressure on Nasdaq 100 index constituents is higher than the S&P Index.
Montagu wrote that bulls being forced to close positions may intensify or accelerate the sell-off in the short term.
If this trend continues, the additional short positions added on Friday will push technology-led indicators into net short positions.
Long positions on both benchmark indices are in the red.