Citigroup suggests that US stock index futures are undergoing a position reset, but there may be further room for unwinding.

Strategists including David Chew wrote that US equity positioning has deteriorated sharply due to widespread de-risking triggered by recent selling in artificial intelligence and tech stocks, with the overall sentiment for large-cap stocks turning bearish.

Notably, the positioning adjustment in the S&P 500 is primarily driven by long liquidation, while the Nasdaq's adjustment shows a more aggressive combination of long liquidation and the establishment of new short positions, pushing its positioning to a one-month low.

European investors continue to reduce risk by taking profits and establishing new short positions, driving Germany's DAX index into bear market territory and increasing the likelihood of a short squeeze should market sentiment improve.

In Asia, taking South Korea's KOSPI index as an example, despite recent declines, its positioning remains elevated, leaving this market most vulnerable to further deleveraging.