FINSUM + Magnifi: BofA says Big Sell Signs are Flashing

(March 2021)

The post-pandemic bull run has touched the breaks, but not necessarily stopped the momentum. However, Bank of America’s Sell Side Indicator, which informs sell-side strategists how much of their portfolio should be allocated to equity. The Indicator jumped up near a percentage point in February after a rise in January as well. BofA Quant, Savita Subramanian indicated that the indicator is in the shell region, and the last time it reached this high was June 2007. Rising bond yields are also pointing to a let-up in equities. Finally, the Wilkshire 5000 (a total stock market indicator) divided by the annual U.S. GDP is Warren Buffet's favorite aggregator and is pushing to record highs. Rising interest naturally puts pressure on stocks anyway and maybe it gives investors an alternative to equities.

(New York)

FINSUM + Magnifi: Other indicators are entering worrisome territory as well. The CAPE price to earnings ratio is elevated to black Tuesday levels and only peaked by the dotcom bubble. Household leverage is also elevated which has been a precursor to economic downturns. 

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