Analysts at Barclays believe that for European equities, the path of least resistance remains higher.
The bank notes that while high positioning and low volatility feel complacent, it may continue into summer and fuel systematic buying.
Barclays also highlighted that mutual funds' equity inflows resumed after the hiccup last month, while retail investors also bought the April dip. In addition, hedge funds' exposure has increased to two-year highs, and risk control funds added to positions as volatility rolled over.
"Equities at fresh highs and, with 80% of stocks trading above 200d ma, look more vulnerable to bad news," cautions Barclays. "Stocks may be treading water near term, with several elections looming. However, positioning risk does not seem to be major on its own and looks fairly balanced to us."
Barclays feels European stocks will find their way higher with fundamentals and buybacks boosting equity demand.