Deutsche Bank's positioning data as of the end of July shows that there is no consensus on a bullish outlook for US stocks. The overall equity position was -0.06 standard deviations, at the 37th percentile historically, slightly below neutral. Active investor positions were only at the 17th percentile, close to the lows of early April, while systematic strategies rose to the 70th percentile. Specifically, CTA and volatility control funds were at the 74th and 67th percentiles respectively, and risk parity funds also had equity allocations above neutral.
This indicates that the recent index rise is not entirely due to investors' shared optimism about fundamentals. Active funds remain cautious, with some buying stemming from quantitative models automatically increasing equity exposure after a trend continuation and low volatility.
This structure could prolong the rise or amplify the pullback: If low volatility persists, systematic funds still have room to increase allocations, and active investors who missed the rally may also buy back in; however, if volatility rises rapidly, systematic strategies may mechanically reduce positions, and low-positioned active funds may not immediately take over. Therefore, the real question now is not whether the index can continue to reach new highs, but whether the rise can attract active funds back.
If buying continues to rely primarily on low volatility and trend models, the market will be more sensitive to volatility reversals.
