Bank of America Issues Sell Signal Amid Elevated Market Positioning
Bank of America has issued a new sell signal based on its Bull & Bear Indicator, which measures extreme positioning across hedge funds, equity flows, and credit-market technicals. The indicator reached levels as high as 9.5 in July 2026—among the highest since 2021—and crossed above Bank of America’s threshold for a contrarian sell signal at 8.0. The firm's chief investment strategist, Michael Hartnett, advised reducing risk exposure due to extreme bullish positioning across asset classes. Historical data from past signals suggests an average decline in global stocks of 2%–3% within two to three months following the trigger. However, this latest signal has not yet led to a downturn as the S&P 500 and MSCI ACWI have continued rising since May. Additional concerns are raised by low cash reserves among fund managers—now at just 3.5%, breaching Bank of America’s Cash Rule—and Morningstar data showing extreme momentum in top-performing stocks, suggesting crowded trades.
Topics: bull & bear indicator risk positioning stock market Wall Street