bank of america merrill lynch bull & bear indicator

“Bank of America Merrill Lynch said in a research note Friday that “ @GregoireFavet BofAML Bull & Bear Indicator tumbles from 2.4 to 1.3. Click the image to enlarge. With more money rushing into equity funds this week than ever before bank of america merrill lynch analysts say their metrics are. BofA's gauge of market sentiment-- the so-called Bull & Bear indicator-- is approaching levels of extreme bullishness, which can trigger a sell.

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bank of america merrill lynch bull & bear indicator

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With the trumpflation rally fizzling with every passing day the only question asked by traders is is it time to sell the market according to bank of america the answer at least for now is no. Can typically arrive at the end of a bull market.

Contrarian Sell Signal Triggered The Technical Analyst

bofa merrill lynch global investment strategy bull bear indicator

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Click the image to enlarge. With more money rushing into equity funds this week than ever before bank of america merrill lynch analysts say their metrics are showing a pullback in stocks is very likely this quarter. Bank of america merrill lynchs bull bear indicator is sending a sell.

Bofa global investment strategy proprietary indicators and bofa bull bear indicator table showing bofas contrarian tail risk relative value and macro indicators. Global investment strategy offers an in depth analysis of critical global issues across disciplines regions and asset classes providing clients with investment ideas and macro perspectives. Bofa merrill lynch global investment strategy.

Investors poured 332 billion into stock based funds last week another indication that the market may be overheating. You are leaving bank of america merrill lynchs website and being redirected to finras brokercheck. Here are the seven rules and indicators bank of america uses to make that determination.

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Bank of America Merrill Lynch

BofA Merrill Lynch Global Research is a department within BofA Merrill Lynch that employs more than 800 analysts engaged in research regarding global equity, global credit, and macroeconomics.

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In its latest statement, released on Nov. 3, the Federal Open Market Committee unsurprisingly held the federal-funds rate at 0.0%-0.25%. Nobody expected a change in rates at this meeting, instead tapering was the main focus. The Fed’s tapering announcement was in line with market expectations, a taper of $15 billion per month ($10 billion of treasuries, $5 billion of MBS), with room to adjust along the way. This baseline tapering should lead to the end of asset purchases by sometime in June.

The overall commentary in the release changed slightly. The Fed referred to factors driving higher inflation as “expected to be transitory” rather than simply “transitory,” which we view as an acknowledgement that inflation has come in above what the Fed expected. The new statement also linked an “easing of supply constraints” to employment gains and a reduction in inflation, an acknowledgement that the supply side is the key determining factor at this point.

We think continued issues within labor supply will be the driving issue determining the timing of rate hikes. While we think it will take years for the labor market to reach its full potential, the Fed will likely start raising rates before we reach what we view as full employment, so the timing is still a bit ambiguous. We think the market may be slightly overestimating the Fed’s reaction function with regards to inflation. We expect inflation may remain slightly above 2% for the next several years, but that this will not force the Fed’s hand on rate hikes. We are leaving our expectations for a single rate hike in late 2022, and a single hike in early to mid-2023 unchanged. This is close to, but slightly below, market expectations for roughly 3 hikes by early to mid-2023. The risks to our outlook are admittedly to the upside, with higher inflation and a more aggressive Fed reaction seeming to be more likely risks than the opposite.


7 Keys to getting through a prolonged market downturn

Avoid knee-jerk reactions. When the market drops, it can be tempting to jump out until asset values begin climbing up again. But that can lead to costly mistakes. By selling when the market has fallen steeply, you’re at risk of locking in a permanent loss of capital. “To optimize one’s potential over the long term, what’s crucial is time in the market, not market timing,” says Niladri Mukherjee, head of CIO Portfolio Strategy in the Chief Investment Office for Merrill and Bank of America Private Bank. “If you sit on the sidelines when markets become volatile, you could miss major rallies, which often occur during the early stages of a recovery, over a limited number of days.1

Revisit your goals and risk tolerance. During a bull market, it’s easy to forget how uncomfortable it can be when your assets decline in value—especially assets that you’re counting on to fulfill a relatively short-term goal. If you’re retiring in a few years, it could be wise to think about dialing back risk, even if it feels as if you’re doing it after the fact. “Investors with longer time horizons could typically withstand market volatility. But if you need to tap investments sooner, you might consider a more conservative asset allocation,” says McGregor.

Typically, the greater the proportion of stocks in your portfolio, the “riskier” it is because you’re less diversified through other kinds of assets that may experience less volatile price swings. “One way for investors to help limit the effect from a market downturn is to invest in longer-term, high-quality bonds, such as Treasurys and very high-grade corporate and municipal bonds,” says Matthew Diczok, a fixed income strategist in the Chief Investment Office for Merrill and Bank of America Private Bank. By diversifying your portfolio more broadly — with a mix of bonds and cash in addition to stocks — you may not experience the same degree of loss, says McGregor. At the same time, she adds, you might not see as great a gain when the market heads back upward.

Keep investing consistently. By investing a fixed amount of money at regular intervals regardless of market conditions, you’re more likely to be able to purchase equities at more affordable prices, and potentially see the shares rise in value once the market rebounds. Making regular weekly or monthly contributions to your portfolio—a strategy called dollar-cost averaging—is a form of systematic investing that potentially can offer efficiency when the market has fallen.

Find strategic opportunities. In a market downturn, defensive stocks—consumer staples, healthcare and utilities, as well as companies with higher-quality businesses and balance sheets—potentially can offer opportunities. You might also find opportunities in higher-quality stocks that pay dividends, especially ones that have historically grown their dividends consistently; they may potentially help to boost your total return when stock prices may be falling. 


Warning: 14 of 19 bear market signals triggered, Bank of America says

Turbulence in the stock market can get old fast. But investors may need to get used to the bumpy ride.

Wall Street is delivering a real scare this October. The Nasdaq is on track for the worst month since January 2016. The Dow swung wildly on Tuesday, plunging more than 500 points before racing back.

Bank of America Merrill Lynch is warning clients that the roller coaster ride could last awhile — perhaps through 2021.

“Expect a long bout of volatility,” Bank of America strategists led by Savita Subramanian wrote in a report published on Sunday.

Bank of America keeps a running tally of “signposts” that signal looming bear market. The bad news is that 14 of these 19 indicators, or 74%, have been triggered. Two more were toppled earlier this month: the VIX volatility index (VIX) climbed above 20 and a growing number of Americans expect stocks to go up.

The recent market mayhem has been sparked by a variety of factors that all speak to an underlying theme: Investors are contemplating the eventual demise of the bull market. The bull run, which began in March 2009, is now the longest in American history.

Wall Street has been forced to confront the threat posed by the US-China trade war. The outbreak of tariffs threatens to slow the world’s two largest economies and eat into record-high profit margins.

The recent spike in 10-year Treasury yields raised worries about higher borrowing costs. And it reminded Wall Street that the Federal Reserve has in the past raised interest rates faster than the economy can handle them.

Investors are also fretting that the good times for Corporate America can’t last forever. Lackluster profits and guidance from the likes of Caterpillar (CAT) and 3M (MMM) on Tuesday triggered worries about a slowdown in earnings growth.

“If US companies can’t blow away the numbers when domestic GDP is growing at +3%, when exactly will they?” Nicholas Colas, co-founder of DataTrek Research, wrote to clients.

Bear market warning lights flashing

Investors may be bearish, but a bear market may not be in the cards just yet.

Some bear market warning lights, mostly concerning market sentiment, have not yet been lit. For instance, Bank of America sees little evidence of the investor “euphoria” that overheats the market. Also, banks have not broadly tightened lending conditions.

The good news is that Bank of America said that previous market tops were preceded by a higher percentage of bear market signposts being triggered. Four of the past seven bull markets peaked with 100% of the indicators being triggered.

Bank of America found that it has taken the S&P 500 21 months on average to peak when a similar percentage of signposts were toppled.

“History says we’ve got 21 months,” the analysts wrote.

Michael Arone, chief investment strategist at State Street Global Advisors, isn’t willing to throw in the towel on the market either.

“I think there are still a few more quarters in this bull market yet,” he said.

Are earnings fears overdone?

High volatility does not mean stocks have to go down.

Consider the 1993 to 1998 period when the VIX climbed from 15 to around 25. The S&P 500 generated annualized total returns (including dividends) of 22% over that span, Bank of America said.

One major concern that has emerged is that corporate profit growth will decelerate later this year and early next. Peak earnings growth could be triggered by a slower economy and the fading impact of the tax cuts.

However, Bank of America isn’t worried because the S&P 500 has posted roughly average returns in the three and six months following peak profit growth.

Many Wall Street pros won’t be willing to call the end of the bull market until a closely watched recession predictor goes negative. The yield curve — the difference between long and short-term Treasury rates — has inverted before every recession since in the past 60 years, according to the San Francisco Federal Reserve.

Although the yield curve has flattened in recent months, it has yet to go negative.

“That tells me we’ve got a ways to go,” said Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management.

Even after the yield curve goes to zero, the stock market doesn’t peak for more than a year, Slimmon said.

“This is just a correction within a bull market,” he said.


Alexander Elder and is a versatile indicator used to measure the strength of the bulls and bears in the market. The stronger one is over the other, the more quantified prices are.


For example, in strong trending markets, bull powers are normally positive and bear powers are negative. But when there is a switch, meaning that bull powers turning negative and the bear powers turning positive, it indicates a strong move to the downside in the markets.

Besides the switch, the Bulls and Bears power indicator can also show extremes. In such instances for example, when the Bears power turns strongly negative, it also indicates a decline in prices while at the same time Bulls power indicator can remain in positive territory. On the standard MT4 trading platform, the Bulls and Bears power indicator are available as two separate indicators. The first chart below shows the bulls and bears power indicator attached to the chart in two sub windows.

Price rally when Bulls power is positive and Bears power is negative. The next chart below illustrates the scenario where the Bears power indicator turns extremely negative and depicts a strong decline in prices as a result.

Not to be confused with strong Bears power in negative sentiment resulting in a strong rally. Bearspower extremely negative, resulting in price declines. While it might seem confusing to use two different indicators, traders can download a combined and we have it prepared for you at the bottom of this page. When applied to the chart, this compact indicator plots the bulls and bears power as a histogram oscillator as shown in the next chart below.

Bulls Bears Power indicator combined. In the above chart, notice that as the bulls power starts to rise, prices tend to rally strongly and when the bears take over, prices post strong declines in the market.

Besides using the 0-line, the Bulls Bears power indicator can be used to spot divergences as well. Because the indicator measures the strength of the bears and bulls, when a new low or a high fails to be confirmed by the Bulls Bears indicator, the short term divergence can offer trading opportunities. The next chart below outlines a few divergence based trade set ups.

Besides the above two ways, Alexander Elder also defined his own set of trading rules using the Bulls Bears power indicator and a 13 period EMA. The Buy Sell rules are defined below. This is a powerful system that you can use to immediately benefit from it.

We have provided the strategy. And now we will provide the trading template. The only thing we ask from you is to help us share this page on social media. Thank you in advance. If you like to learn how to anticipate market movements and stop using lagging indicatorsthen you will absolutely LOVE our Sniper Trading System. All you need is to have your live account verified!

Of course, you need to open a live account Both Forex Brokers have excellent rating! Broker 1.What makes this indicator something of interest is its track record; one that supposedly had demonstrated a stunningly accurate track record for predicting size and relative timing within a three-month time frame.

Was that an accurate prediction, or pure coincidence? The indicator has a set of 19 criteria which are analyzed to measure the potential for a bullish or bearish market turn. When these conditions accumulate, they trigger a warning signal that a market turn is imminent. As of this week, the indicator is once again sensing an accumulation: 13 of the 19 conditions have been triggered.

bofa bull bear indicator

As contrarian value investors, this is not an easy call to make. But if this bull market is closer to over, our analysis of factor returns indicates that late-stage bull markets have been dominated by stocks with strong price momentum and growth, while value, analyst neglect, and dividend yield have been the worst-performing factors. The risk of loss in the trading of stocks, options, futures, foreign exchanges, foreign equities, and bonds can be substantial and is not suitable for all investors.

Trading on margin or the use of leverage is not suitable for all investors and losses exceeding your initial deposit is possible. Supporting documentation is available upon request. Trading futures, options on futures, and foreign exchanges involves substantial risk of loss and is not suitable for all investors.

Carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources and only risk capital should be used. Opinions, market data, and recommendations are subject to change at any time.

bofa bull bear indicator

The lower the margin used the higher the leverage and therefore increases your risk. Past performance is not necessarily indicative of future results. Consensus projected long-term growth top decile vs. We have yet to see a bear market when the level had not been breached in the prior 24m.

Similarly, we have yet to see a bear market when the 20 level had not been breached in the prior 6m. While not always a major change, aggregate growth expectations tend to rise within the last 18m of bull markets. Based on 1- and 3-month estimate revision trends; see footnote for more detail. Forward 12m earnings yield top decile vs. A contrarian measure of sell side equity optimism; sell signal triggered in the prior 6m. A contrarian measure of buy side optimism. Does not always lead or catch every peak and all but one inversion has coincided with a bear market within 24m.

Search for:. Recent Posts Market Snapshot — Tuesday Recent Comments. Categories Uncategorized.The relentless gush of cash into the stock market is sending a powerful "sell" signal, according to a Bank of America Merrill Lynch gauge that has been a reliable indicator in the past.

The week continued a trend that has seen money rush into stocks as major averages climb to new records. The Dow Jones industrial average is up 7 percent year to date. While the inflows have helped push the market higher, they also can be seen as a contrary indicator when they flash signs of excess. The current reading on the indicator of 7. In the near term, around February and March, that suggests a technical pullback for the to 2, which would represent a drop of close to 6 percent, Hartnett said.

The enthusiasm has not been unique to the U. That comes as 98 percent of global markets are trading above their and day moving averages, both classic signs of overbought markets. Sign up for free newsletters and get more CNBC delivered to your inbox.

RSI Indicator Secrets: Powerful Trading Strategies to Profit in Bull & Bear Markets

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bofa bull bear indicator

Markets Pre-Markets U. Key Points. VIDEO Related Tags. News Tips Got a confidential news tip? We want to hear from you. Get In Touch. CNBC Newsletters. Market Data Terms of Use and Disclaimers.BAML's indicator has been tracking sentiment since For reference, the indicator hit 71 in and 44 in This logic makes your head hurt.

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The chart's purported signal based on bullishness or bearishness make absolutely no sense. Yes, there is most certainly a relationship between market sentiment and market peaks and troughs. But the accuracy of the Sell Side Indicator chart below seems suspect, at best. A reading above the red line indicates a sell signal and a reading below the green line indicates a buy signal.

In hindsight, it's clear you might have been better off not investing afterbut hindsight only works retroactively. The sell signal stayed in place untilwhich would have led an investor to miss the bottom of the market in and the run up through There is an excellent alternative: invest in the stock market for the long term, or identify a business you like and believe will grow over time.

Yep, one has to love it.

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BofA’s Bull Bear Indicator Close to Another Powerful Sell Signal

Your Money. Personal Finance. Your Practice. Popular Courses. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Related Articles. Partner Links. Cross-Selling: What Everyone Should Know To cross-sell is to sell related or complementary products to an existing customer.

Cross-selling is one of the most effective methods of marketing. Bullish Engulfing Pattern A bullish engulfing pattern is a white candlestick that closes higher than the previous day's opening after opening lower than the previous day's close. Fulcrum Point Fulcrum point refers to a major change in direction for a security or the economy in general.

Wirehouse Definition A wirehouse is a term describing a full-service brokerage firm. Fear and Greed Index Definition The fear and greed index was developed by CNNMoney to measure two of the primary emotions that influence how much investors are willing to pay for stocks.Image: BofA Global Research. Large Caps Ratio This chart suggests that secular bull markets are bearish for small caps. Volatility and Equity Bull Markets Sincewhen equities are still rising, volatility tends to increase in the last stage of bull markets.

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Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies.Fourteen down, five to go: That's the status update on Bank of America Merrill Lynch's signposts for the next bear market in stocks.

The latest signal was triggered by the recent outperformance of low-quality stocks — companies with the highest levels of debt and weakest profitability — over high-quality stocks, the firm said in a note to clients on Wednesday.

BAML found that relative to the rest of the market, active fund managers were the most invested in low-quality stocks.

Bear Bull Power Indicator Explained

This indicator is a scale of zero to 10 and is not intended to be a benchmark. It's a contrarian indicator, meaning that when it's in "extreme bearish" territory, it's usually a sign to buy. When stocks surged at the beginning of the year, the indicator swung into "extreme bullish" territory.

And within a week of the market's correction in early February, BAML alerted clients that its indicator was flashing a sell signal.

The other bear-market signposts that have been triggered provide some ideas on why BAML thinks there's reason for longer-term caution on stocks. They include the Federal Reserve, which has always preceded bear markets by raising rates by at least 75 basis points.

Also, companies that beat on both earnings per share and sales are getting smaller stock-price lifts from investors. According to Subramanian, it took 21 months on average to hit a stock-market peak after this threshold was reached during the last seven market cycles.

One signpost that's yet to be triggered is an inversion of the yield curve, though the difference between the two- and year yields is at its lowest level since the recession. Mining Equipment Manufacturers and Service Providers. Another signal that Bank of America is watching for a bear market has been triggered, and the countdown is on. Your browser does not support iframes.Bank of America's flagship sentiment index collapsed this month, not unexpectedly, falling toward extreme bearish territory and triggering a contrarian buy signal.

The bull and bear indicator fell to 1. The top tail risks, in order: the coronavirus at 58 per cent, monetary policy impotence, the US presidential election and the bond bubble popping. The drop follows record bond fund outflows, sharp underperformance of credit markets, a spike in cross-asset volatility, and reflects that all of the MSCI equity country indices are in bear markets, BofA said.

The buy signal also implies that the yield on the US year government note will retrace toward 1. At Bank of America said the extreme bear positioning is coinciding with policy panic to offset a June quarter recession, a Wall Street liquidity freeze and surging debt default risk. More is required to restore battered animal spirits, the bank said, pointing in particular to a program to bolster the commercial paper market and coordinated fiscal measures. Bank of America said there is one caveat or ghost in the machine in terms of when investors should start to buy because a contrarian sentiment signal can be too early when an exogenous event - like COVID - is occuring.

As an example of too early a buy signal, the bull and bear indicator flashed a buy signal in Julytwo months before Lehman Brothers failed. A sustained rally will require further macro and market policy moves "plus faith that the virus is peaking" in both Europe and the US.

Cash levels jumped to 5. Skip to navigation Skip to content Skip to footer Help using this website - Accessibility statement. Timothy Moore Online editor.

Mar 18, — 2. Prior to this month's contrarian buy signal, the previous one was on August 29 last year. License article. Read More Wall Street Unable to follow, try again. World markets Unable to follow, try again. Timothy Moore is an online editor.

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Warning: 14 of 19 bear market signals triggered, Bank of America says

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