The stock market is currently booming with new inflows, as investors continue to place their bets, projecting their bullish sentiments. The markets are also responding dynamically, with the US stock mechanisms hitting new highs as of late. In the middle of this, Bank of America’s bull and bear indicator is signaling a strong optimistic streak ahead, indicative of a strong and prosperous stock era to continue for months to come.
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BoFA Bull and Bear Indicator Turns Bullish
In a recent update by the Kobeissi Letter, Bank of America’s bull and bear gauge tool is now up to 9.4, the highest the indicator has been since February 2018. This indicator measures investors’ greed and fear on a scale to 10. A reading between 8 and 10 signifies extremely bullish sentiment, projecting a “contrarian sell signal.”
The KL post outlines how this indicator is at its 4th highest level in 24 years, signaling a bullish time for investors to bask in.
“Investors have rarely been this bullish this century. Bank of America’s Bull & Bear Indicator is up to 9.4 points, the highest since February 2018. This measures equity and bond flows, hedge fund and fund manager positioning, and market breadth. The gauge is now at its 4th-highest level in 24 years, signaling extremely positive market sentiment. This comes as 5 out of 6 indicator components show bullish and very bullish sentiment, with only bond flows at neutral. The most recent increase has been driven by rising global stock market breadth and fund manager cash at a record low of 3.2%. Investor demand for equities is exceptionally strong.”
US Stock Market Concentration Hits New Highs
Another KL post pinpointed a major development, showcasing how the HHI index has been up to 195 points, signalling a balanced equity distribution by investors across the 500 stocks in the index.
“US stock market concentration is at record levels. The S&P 500 Herfindahl-Hirschman Index (HHI) is up to 195 points, near the highest on record. This metric measures how evenly market value is distributed across all 500 stocks in the index. A higher number indicates increased concentration, meaning fewer stocks are driving market performance. This index has more than DOUBLED since the 2020 pandemic. By comparison, the HHI index peaked at 125 points during the 2000 Dot-Com Bubble. The market has never been this top-heavy.”
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