Michale Hartnett (Bank of America Chief Investor Strategist) said that the 4 week average of stock flows turned negative.

Over the week from Wednesday to Thursday, stock and bond outflows were $9.1 billion and $3.4 billion respectively.

“Flows were ‘risk-off’ heading into FOMC…big inflow to Treasuries ($6.0bn), big outflow from TIPS ($3.2bn), big outflow IG bonds ($7.3bn), largest REIT outflow ever ($2.2bn), big outflow financials ($1.6bn), 4-week average of flows to stocks turning most negative since May ’20,” Hartnett said in a client note.

The strategist said that there have been 19 bear market events in 140 years, with an average price fall of 37.3% for the past 9 months.

“Past performance no guide to future performance, but if it were, today’s bear market ends Oct 19th ’22 with at 3000, Nasdaq at 10000; good news is many stocks already there, e.g. 49% of Nasdaq >50% below their 52-week highs, 58% of Nasdaq >37.3% down, and 77% of index in bear market, i.e. down >20%; good news is bear markets are quicker than bull markets,” Hartnett added.

Bank of America’s Bull & Bear Indicator remains flat at 2.1 with Hartnett noting that $1.1 trillion of inflow to stocks since January 2021 had an average entry point of 4274 on the S&P 500.

“Yes all are bearish, but paralysis rather than panic best describes investor positioning YTD,” Hartnett concluded.

By Senad Karaahmetovic