With all those declines, the BofAML Bull & Bear Indicator fell to 1.8, which Hartnett and team describe as an « extreme bear » reading.
After a difficult few trading days in the beginning of the year, U. S. stocks are bouncing back with meaningful gains on Monday following Friday’s strong rally. The S&P 500, Dow Jones Industrial Average and Nasdaq 100 were all up by more than half a percent by midday. It looks like investors could be taking advantage of the end-of-the-year declines, but is this a wise time to be buying?
Trying to time the bottom of the market will almost always be a fool’s errand, but one firm suggests equities could have much farther to fall before they hit bottom in 2019.
Q3 hedge fund letters, conference, scoops etc
In their « Flow Show » report last week, Bank of America Merrill Lynch Chief Investment Strategist Michael Hartnett and team suggested that it is time to buy, but stocks probably aren’t yet at the « Big Low of ’19. » They calculated flows for each major asset. The U. S. dollar was up 4.4%, while cash was up 1.9%. Bonds were down 1.2%, equities fell 8.7% and commodities declined 13.1%.
They also said 2018 was the first year cash has outperformed both bonds and stocks since 2000. With a dramatic flourish, they described the stock market in 2018 as « Apocalypse Dow » filled with « horror » since the « Big Top of Jan’ 18. »
All that drama seems warranted since the global equity market has shed $19.
