US Stocks: Low Positioning Fuels Year-End Rally Hopes
Wall Street banks and trading firms see conditions for a possible year-end rally in US stocks after the US midterm elections. Citadel Securities says CTA net exposure to US equities is near its lowest level since 2018, while retail investors bought nearly $33 billion in stocks over 22 consecutive trading sessions from 5 October. The share of S&P 500 market capitalisation eligible for buybacks is expected to reach 85% by 9 November.
Valuations have also fallen: the Nasdaq 100’s price-to-earnings ratio is 19.1, its lowest since October 2022, while the S&P 500 semiconductor stocks’ multiple has dropped to 13.8. At the same time, forward earnings estimates since late June have risen 32% for memory, 31% for AI infrastructure and 30% for semiconductors. JPMorgan remains tactically bullish and recommends combining technology and cyclical stocks. HSBC says a potential Anthropic IPO could further improve sentiment towards technology shares. These signals support the case for a US stocks rebound, but do not guarantee one.
Bullish
The article is moderately bullish for crypto markets, but the link is indirect: it concerns US equities rather than digital assets. Low systematic positioning, sustained retail buying, resumed corporate buybacks and lower technology valuations alongside stronger earnings expectations point to the potential for a broader risk-on shift. If investors rebuild exposure to growth assets, crypto could benefit through improved risk appetite and renewed demand for higher-volatility assets such as bitcoin and ether.
Similar episodes show that post-election rallies or rebounds after sharp positioning reductions can lift crypto when liquidity and sentiment improve. However, historical equity performance is not a reliable crypto signal, and the article’s cited 95% frequency of S&P 500 gains in the 12 months after midterm elections does not establish a causal relationship with digital assets. Crypto prices remain sensitive to their own drivers, including interest-rate expectations, dollar strength, fund flows, leverage and regulatory news.
In the short term, a sustained US stock rally could support crypto prices, while renewed volatility or a reversal in equity sentiment could prompt correlated selling. Over the longer term, continued earnings growth and durable risk appetite would be more supportive than positioning data alone. Traders should therefore treat the news as a modest positive macro backdrop, not as a standalone buy signal.