Bank of America’s Bull & Bear Gauge Hits 8.8, Predicts 2–3% Stock Declines
BAC•Bank of America’s Bull & Bear Indicator rose to 8.8 from 8.7, staying in sell territory for a fourth week as tech fund inflows offset high-yield and emerging-market bond outflows. Past signals preceded average equity drops of 2-3% over three months and drawdowns of 15-20%, with inflation, tighter policy risk.
1. Bull & Bear Indicator Rises to 8.8
Bank of America’s Bull & Bear Indicator climbed from 8.7 to 8.8, marking a fourth consecutive week in sell territory. The gauge incorporates fund-manager positioning, bond and equity flows, credit-market technicals and broader stock-market breadth, while hedge fund positioning remains neutral.
2. Record Tech Inflows Offset Bond Outflows
The rise was driven by record inflows into technology funds, which were partially offset by outflows from high-yield and emerging-market bonds. Softer global equity breadth also helped cap the indicator’s increase.
3. Signal History and Market Implications
Since 2002, the indicator has flashed sell signals 17 times, with subsequent average global equity declines of 2-3% over two to three months and peak drawdowns of 15-20%. This track record highlights the gauge’s value as a near-term risk warning.
4. Inflation and Monetary Policy Risks
Elevated inflation and the potential for tighter monetary policy could further pressure risk assets, reinforcing the indicator’s bearish signal and suggesting continued caution in equity markets.
