Bank of America's Bull & Bear indicator rose, signaling investors to sell stocks as the market shows signs of potential decline.
Bank of America signals sell
Indicator rose to 8.5
MSCI index averages 2.4% decline
S & P 500 slipped 1.1% in December
Tech sector down 2.5% month-to-date
Record inflow into equities
Bank of America’s latest Bull & Bear indicator has triggered a sell signal for stocks. The indicator increased to 8.5, indicating “extreme bullish” sentiment, suggesting investors should sell their shares.
Sell signal and market trends
Bank of America’s indicator has issued a sell warning 16 times since 2002. Historically, following such warnings, the MSCI All Country World Index has experienced an average decline of 2.4% over the next two months, while the S & P 500 typically falls by 1.2%.
Stocks are facing challenges as investors express concerns about high valuations, particularly related to artificial intelligence stocks. The S & P 500 is down 1.1% this December and may end a seven-month growth streak.
Current stock performance
Despite struggles, the S & P 500 remains 15.2% higher for the year and reached a record closing high earlier this month. However, the tech sector, the largest segment by market capitalization, has fallen by 2.5% this month.
In support of this trend, inflows into equities are robust. Bank of America noted a record influx of $145 billion into equity ETFs this week, with U.S. stocks garnering $77.9 billion, marking the second-highest inflow on record.
Investor recommendations
Given the potential market declines and the S & P 500’s difficulties maintaining key technical levels, it may be wise for investors to consider reducing their stock positions as they approach the new year.
This cautious approach aligns with Bank of America’s historical observations and current market conditions.
Sophia Clarke is a senior international journalist with nine years of experience covering global politics, human rights, and international diplomacy.
She earned her M.A. in International Relations and Journalism from the University of Oxford (2016), where she specialized in global governance, conflict reporting, and cross-cultural communication.
Sophia began her career as a foreign correspondent for BBC World Service and later joined The Guardian, where her insightful analyses and on-the-ground reporting from Europe, the Middle East, and Latin America earned her recognition for accuracy and integrity.
Now based in Paris, France, Sophia contributes to Faharas NET, providing comprehensive coverage of diplomatic affairs, humanitarian issues, and policy developments shaping the international landscape. Her storytelling combines investigative depth, journalistic ethics, and a strong commitment to amplifying underrepresented voices in global dialogue.
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