BofA’s Bull & Bear Indicator rose from 0.0 for the first time since late March this week, the bank’s Michael Hartnett says, in the latest edition of his popular “Flow Show” series.
The barometer ticked up to 0.4 after weeks pinned at the zero lower bound (bad Fed joke).
For those curious, Hartnett notes that the past five instances of “‘extreme bear’ fever broke with SPX up 2.8% in 4 weeks, 4.8% in 8 weeks, but 12-week returns more mixed”. The figure depicts the breakdown across five previous episodes of acute market angst.
Meanwhile, we are currently witnessing what appears to be the beginnings of the most spectacular bear market rally of all time.
The three greatest came in 1929, 1938, and 1974, Hartnett writes.
He goes on to note that if one assumes a similar trajectory off the lows, it would put the S&P between 3,300 and 3,600 “sometime between August and January 2021”.
(BofA)
In post-NFP trading Friday, US equities surged between 3.5% and 2% depending on the benchmark, as investors piled in after an astounding jobs beat, which Donald Trump marked with a 45-minute-long improvised speech at the White House.
The S&P is now gunning for 3,200. You already know the story with big-cap tech. 51 days on from the panic lows, US equities are trading at levels that would suggest nothing happened.
“[The] COVID-19 crash saw $30 trillion in market cap losses, a global GDP loss of $10 trillion, policy stimulus [worth] $18 trillion, and cash on the sidelines of $5 trillion”, BofA’s Hartnett goes on to say.
He also remarks that the S&P will likely make a run at 3,250 this month or next, but suggests that attempt may fail.
“Sell SPX 3,250”, Hartnett writes. That level would represent 25x total EPS of $130.
We could see 3,250 within days.
But at this point, do we still call it a “bear market rally”?
How could it not try to test the lows?
Oh, well, I’m a dope. I missed out on the greatest bear market rally of all time. Missed out on tons of gains. My mistake.
I too am a dope. The story is not over.