Equity positioning and leverage have increased again following the deleveraging seen earlier in the summer, according to JPMorgan, which said the renewed build-up could present a challenge for equity markets during the fourth quarter.
Strategist Nikolaos Panigirtzoglou said the measures remain below the levels recorded during June and July but have moved higher over the past two months.
“Elevated equity positioning and leverage have re-emerged, albeit to a lesser extent than last June/July, posing some challenge to equities into Q4,” Panigirtzoglou wrote.
JPMorgan had said at the end of July that the earlier reduction in leverage had largely removed previous positioning excesses. The bank’s latest analysis shows several measures have subsequently rebounded.
US equity futures leverage is now close to its highest levels of the year, according to JPMorgan. Its broader positioning measure appears to have reached a peak in September after rising to levels comparable with January and August 2025.
JPMorgan Tracks Rebuilding of Long Positions
Short interest in SPY has started to move away from the record low reached in early September, while semiconductor ETF short positions have normalised, according to JPMorgan.
The bank said these developments indicate that most of the previous short-covering activity has already occurred.
Momentum-based investors have also begun rebuilding long exposure to the Nasdaq, Kospi, Taiwan and Nikkei. JPMorgan said these positions have increased without reaching the previous extremes.
Assets held in leveraged equity ETFs as a proportion of the underlying market’s value have also increased over recent weeks.
Among the various indicators, JPMorgan identified leverage in margin accounts as the largest vulnerability. The bank said margin leverage remained at very elevated levels in August and declined only marginally during the summer’s broader deleveraging.
Technology and AI Fundamentals Remain Supportive, JPMorgan Says
While highlighting the potential positioning headwinds, JPMorgan said it continues to see fundamental support for technology and artificial intelligence-related markets.
The bank pointed to increases in memory prices and higher capital expenditure forecasts from hyperscalers.
JPMorgan also noted that AI computing prices have remained stable, providing another factor in its assessment of underlying conditions across the technology and AI segment.
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