BofA's Bull Bear Indicator Hits 10-Month High, Signalling Potential Sell-Off

Prepare For a Market Correction: BofA Indicator Nears Sell Trigger

The BofA Bull Bear Indicator, a widely-followed positioning model, has surged to its highest level since March 15, raising concerns about an impending market correction.

The indicator, which ranges from 0 to 10, measures the relative strength of bull and bear market sentiment. A reading above 5 indicates a bullish market, while a reading below 5 signals a bearish market.

The indicator's recent rise to 9.2 in the week to August 18 is particularly noteworthy, as it suggests that investors are becoming increasingly optimistic about the market's prospects.

However, analysts at BofA warn that the indicator is now approaching a "sell" trigger level of 10, which could signal a potential market correction.

This is because when the indicator reaches 10, it suggests that investors are overly bullish and may be setting themselves up for disappointment if the market falls. In the past, such high readings have often been followed by market declines.

BofA's analysts cite several factors that could contribute to a market correction, including rising interest rates, global economic uncertainty, and geopolitical tensions.

Investors are advised to be cautious and consider reducing their exposure to riskier assets until the BofA Bull Bear Indicator falls below 10.