Citi analysts said Tuesday that the "very bullish" consensus positioning in U.S. and Japan equities could increase near-term volatility.
However, they wrote in their equity markets positioning note that ongoing profit-taking means profits on current positions are not overly extended.
"US equities have sustained a rally with persistent flow momentum for several months and positioning continues to be very extended with large ETF inflows," the analysts said. "Despite the extended net position of these markets, the rolling nature of positions over this period means that new profits only average 4-5%."
Meanwhile, they noted that the extended bullishness has spread to the UK's FTSE 100, with the significant jump in the last week establishing "the first net long positioning since March," with the trend of reducing large net shorts going for months.
Analysts concluded that Australia's ASX 200 is now among the most extended markets, while China is the contrast, being the only market with a net bearish position.