Beware investors: Market is flashing warning signs of a possible stock slump, says Citi

The US stock market is lying in a very interesting position at this point, more so because of the political uncertainty surround the Presidential elections in November. Volatility factors have become a reality under these circumstances, with some stocks that are betting on Donald Trump, shooting upwards while some assets like Dow Jones Industrial Average showing a sharp dip in recent days.

S&P 500’s dip to continue?

Meanwhile, reports suggest that US investors’ exposure to S&P 500 has been the highest since 2023, with its demand growing even amid a sharp fall in the last couple of months. S&P 500 always had history of dipping in the months of September every year, for more than a decade, and therefore, there was not much worry in the markets for a month, but fears around its continued dip from mid-October, and with the political uncertainty around the US elections, and the future of US politics, things are even more complex for S&P 500 and its reliant stocks.

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Reports suggest that the sudden uptick in S&P 500 positioning among US investors is happening probably after the index rose almost 23% this year, according o Citi analysts.

Meanwhile, Nasdaq is faring well and is continuing to be low with the net positioning at neutral. There are also reports that a common feature for both the markets at this point, is that 100% of the short positions are out of the money race. This will end up leaving a potential upside risk for investors if the markets continue to drift in the upward direction, according to a Business Insider report.

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FAQs:

Is Dow Jones Industrial Average at a low?

Owing to the massive political uncertainty ahead of the US elections, Dow Jones Industrial is facing the full wrath of it, and is reporting a major dip.

Is the US stock market in a volatile condition right now?

The US stock market is under a severe risk of volatility, as major stocks are reporting a dip amid changing political conditions in the US.

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