(Bloomberg) -- Exposure to stocks is now so high that any weakness is likely to set off a bigger slump once investors start to cut back on their long positions, according to top Wall Street strategists.

A survey from Bank of America Corp. found that investor allocation to equities is at the highest in over two years, while data from Goldman Sachs Group Inc. and Citigroup Inc. showed that funds have little room to keep buying stocks after this year’s record rally.

There are $52 billion of long positions on the S&P 500 and 88% of them are in a loss, a situation that Citigroup strategist Chris Montagu sees as a risk for the market.

“Should the market turn negative, the move could be faster and larger due to the large, long positions already in the red,” Montagu wrote in a note.

The warning on investors’ bullish positions comes just as angst over elevated US interest rates, signs of fading momentum in China’s economy and rising tension in the Middle East are fueling a global equity selloff. 

Read more: Hedge Funds Sell Global Stocks for Third Week, Goldman Data Show

Europe’s benchmark index is on track for its biggest one-day drop since July after the S&P 500 fell to the lowest in more than a month, adding to more than 3.5% in losses since a peak in March.

Data from Goldman Sachs’s trading desk showed that commodity trading advisers — funds that use systematic strategies to trade futures contracts — have about $170 billion worth of bullish bets on global equities. 

These funds would need to sell $29 billion of global equity futures in a down market this week and as much as $229 billion over the next month if the stocks keep dropping. This figure includes $59 billion of S&P 500 futures.

“We have CTAs as sellers of S&P 500 in every scenario over the next week and month,” Goldman Sachs Derivatives and Flow Specialist Cullen Morgan wrote in a note to clients on Monday. 

BofA’s survey showed that investors have raised their allocation to equities to net 34% overweight, the biggest since January 2022, in a poll conducted from April 5-11 among 224 participants with $638 billion in assets under management.

“Bull sentiment is not quite at ‘close-your-eyes-and-sell’ levels, but risk assets are tactically much more vulnerable to bad news than good,” strategist BofA Michael Hartnett wrote in a note.

Corporate earnings are adding another layer of risk. Analysts have reduced first-quarter profit estimates ahead of the reporting period, lowering the bar to beat expectations. 

Even so, market forecasters at JPMorgan Chase & Co. and Deutsche Bank AG don’t expect a significant boost to stocks after the sharp rally in the first quarter.

Read more: JPMorgan’s Matejka Says Earnings Unlikely to Boost Lofty Stocks

--With assistance from Michael Msika.

(Updates throughout with BofA survey, Goldman Sachs data on CTAs)

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