Bank of America: Global Stock Markets Nearing Sell Signal

On June 7th, the U.S. bank strategist Michael Hartnett cautioned that the global stock market is on the verge of triggering a technical "sell" signal following the attainment of a historical high this week. He indicated that the market has become overheated after experiencing a rapid 20% increase within just two months. He presented fund flow and market breadth data as evidence of investors' rush into risk assets with overly elevated positions. Traders commonly view this as a bearish signal because it theoretically suggests that the buying power in the market may soon be depleted, thereby making a price correction likely. The data referred to by Hartnett shows that in the past four weeks, funds flowing into stocks and high-yield bonds accounted for 0.9% of the total assets. He stated that if this figure rises above 1%, it would serve as a signal for investors to sell. Meanwhile, the market is approaching the "overbought zone." Approximately 84% of national indices are positioned above their 50-day and 200-day moving averages. He mentioned that when this indicator reaches 88%, that is his sell trigger point. (FX678)