Is this the top you’re looking for?
Maybe. Equities just witnessed their largest inflow on record, taking in $58.1 billion over the last weekly reporting period, BofA said, summarizing EPFR data in the latest edition of the bank’s popular weekly “Flow Show” series.
Tech inflows were $5.4 billion and US large-caps enjoyed their second-biggest haul ever at more than $25.1 billion. Small-caps, meanwhile, got $5.6 billion, the third-largest inflow on record.
The bank’s “Bull & Bear Indicator” is at 7.7. That’s “close to [a] 8.0 sell signal,” the bank remarked, before reminding folks that the “most recent contrarian ‘sell’ signal was January 30th 2018.”
That, of course, came amid the post-tax cut melt-up and just ahead of the equity correction catalyzed by the implosion of the VIX ETN complex.
For those curious or otherwise not apprised, the median three-month return from a dozen historical ‘sell’ signals going back two decades is -9.0% for global equities and a 45bp decline in 10-year Treasury yields. The former is relatively easy to imagine. The latter would be a pretty dramatic move considering the already low starting point (it would put the 10-year at ~0.75%).
Notably, the bank’s Michael Hartnett observed that private client equity allocations as a percentage of AUM are now above 63%, a record high. At the same time, the drawdown in cash is the largest since September of 2019.
Everybody wants on board this train, apparently. The problem, colloquially speaking, is that it’s barreling down the tracks at what some argue are unsafe speeds.
As usual, the institutional crowd is milling about inside, sipping Gibsons in the bar car.
Unnervingly, though, there are twentysomethings with suction cups on their hands HODLing outside, peering in through the windows and scrawling pictures of a Shiba Inu on the glass in multi-colored Sharpie.