Bank of America's strategist team led by Michael Hartnett said that asset allocators have become extremely bullish. This is usually a warning sign for the market that investors should “reduce their exposure to stocks, retreat, or rotate sectors” rather than continue to increase positions in risky assets. Hartnett wrote in a Friday report that the Bank of America's internal sentiment indicator, the “Bull and Bear Index,” is flashing a reverse “sell signal.” This is mainly due to “a sharp drop in institutional cash levels, strong inflows of equity capital” and an increase in the breadth of global stock indexes. The indicator has climbed to 9.6, further pushing into the extremely bullish zone. Whereas about two months ago, the indicator read 8.0, which usually means the market is overheating due to crowded bullish positions. Bank of America said that the indicator below the 2.0 threshold means a buy signal.

Bank of America's strategist team led by Michael Hartnett said that asset allocators have become extremely bullish. This is usually a warning sign for the market that investors should “reduce their exposure to stocks, retreat, or rotate sectors” rather than continue to increase positions in risky assets. Hartnett wrote in a Friday report that the Bank of America's internal sentiment indicator, the “Bull and Bear Index,” is flashing a reverse “sell signal.” This is mainly due to “a sharp drop in institutional cash levels, strong inflows of equity capital” and an increase in the breadth of global stock indexes. The indicator has climbed to 9.6, further pushing into the extremely bullish zone. Whereas about two months ago, the indicator read 8.0, which usually means the market is overheating due to crowded bullish positions. Bank of America said that the indicator below the 2.0 threshold means a buy signal.