BofA Stock Sell Signal Hits Highest Level Since 2021 Rally Peak

Bank of America's Bull & Bear Indicator rose to 9.6 last week, marking the highest sell signal level since the 2021 pandemic-era stock market rally peak. The indicator, which measures investor sentiment on a 0-10 scale, increased from 9.5 to 9.6, according to a report from BofA's research team led by Chief Investment Strategist Michael Hartnett on the 24th. The indicator is considered a contrarian measure—when investors become extremely optimistic, it signals selling opportunities, while extreme pessimism indicates buying opportunities.

BofA Indicator Shows Historical 2-3% Average Decline Pattern

The Bull & Bear Indicator is calculated based on investor sentiment factors including hedge fund positions, equity and bond fund flows, and technical indicators. BofA's research team stated in the report that among 17 sell signals recorded since 2002, global stock markets declined an average of 2-3% over three months following the signal, with maximum declines reaching 15-20%. The analysts noted that buy or sell signals typically persist for 1-3 months.

BofA Analysts Cite Interest Rate Risk Factors

BofA identified interest rates as one potential factor that could negatively impact markets, referencing expectations for possible Federal Reserve rate hikes in coming months. The research team stated in the same report that "stock investors do not currently view interest rate levels as a threat to the bull market in risk assets other than bonds," but added that "markets would face negative shock if the market-friendly U.S. administration tolerates rate hikes ahead of midterm elections to cool market overheating and ease resentment toward billionaires."

FAQ

What level did BofA's Bull & Bear Indicator reach last week?

The indicator rose from 9.5 to 9.6, reaching the highest sell signal level since the 2021 pandemic-era stock market rally peak.

What has happened historically after BofA's sell signals since 2002?

Among 17 sell signals recorded since 2002, global stock markets declined an average of 2-3% over three months following the signal, with maximum declines reaching 15-20%. These signals typically persist for 1-3 months.