A boost in exposure to U.S. stocks by trend-following hedge funds may be signaling a decline is in the offing. This according to a recent article in Bloomberg.

The article cites comments from Sundial Capital Research Inc. founder Jason Goepfert that although equity-focused hedge funds are underweighted in stocks, trend-following funds “have suddenly seen the light, going from 25% short exposure in March to more than 50% long exposure” as of the second week in July.

In a recent note, Goepfert pointed out that exceeding the 50% mark for the first time in 30 days or more has tended to signal subsequent declines. The article adds, “Positioning has been in focus recently, with JPMorgan Chase & Co. saying on July 12 that equity upside might be limited because non-bank investors are overweight stocks relative to levels over the past decade.”

According to Goepfert, however, “This is primarily a shorter-term worry, especially given that equity-only funds seem to be heavily under-invested on a longer time frame.”