BofA's Hartnett says Bull & Bear Indicator falls below 8; technology-stock sell signal ends, but stance remains defensive

AT A GLANCE

Hartnett says the sell signal has ended but no buy signal has emerged; whether investors return to technology stocks depends on semiconductor prices.

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BofA's Hartnett, who accurately predicted the sharp sell-off: the “sell signal” has ended; investors November Whether they can return to technology stocks by mid-month depends critically on semiconductor prices

BlockBeats reported that October 18 BofA Securities strategist Michael Hartnett said in the latest Flow Show report that BofA's Bull & Bear Indicator fell from 8.1 to 7.4, falling below the 8.0 threshold and ending the sell signal triggered by May 26. However, he stressed that the end of a sell signal does not mean a buy signal has emerged. He remains tactically defensive and is not adding to technology-stock positions for now.

The prerequisites Hartnett listed for returning to risk assets include the Federal Reserve October 28 raising interest rates to restore credibility, and easing concerns over AI financing; neither has materialized so far. Meanwhile, market-implied odds of the Federal Reserve October raising interest rates have fallen from more than 50%to 14%，AI The credit market, meanwhile, experienced its worst 1 week of the year, with CoreWeave bonds falling into distressed territory and 5-year credit default swap (CDS) spreads implying an approximately 63%probability of default.

He noted that the cooling in market sentiment has not yet been accompanied by sufficient outflows. The latest weekly data show net inflows of 64400000000 USD into equity funds and net outflows of 53100000000 USD from money market funds. BofA private clients' equity allocation reached a record 66.4%, while their cash allocation fell to a historic low of 9.3%；October Fund manager surveys show that investors' overweight in technology stocks is at its highest level since 2020 August.

Regarding the outlook, Hartnett views semiconductor prices as the key variable. If chip prices continue rising, he expects investors to return to technology stocks by mid-November and to reverse their “short technology, long bonds” positions as 2027 begins. Conversely, if semiconductor prices decline, he believes it would mean further tightening in AI credit conditions and that capital-expenditure growth has peaked; bonds may outperform, while the core driver of asset returns in 2027 will also shift from capital appreciation to income.

In allocation, Hartnett is increasing exposure to small-cap stocks,REITs and consumer discretionary—assets that benefit from “peak yields”—while maintaining a long-term overweight in gold, commodities, and emerging markets.

Original link https://m.theblockbeats.info/flash/372403

Key points

BofA Securities strategist Michael Hartnett said BofA's Bull & Bear Indicator fell from 8.1 to 7.4, below the 8.0 threshold.
Hartnett said the sell signal triggered by May 26 has ended, but that does not mean a buy signal has emerged, and he is not adding to technology-stock positions for now.
The prerequisites Hartnett listed for returning to risk assets include the Federal Reserve October 28 raising interest rates and easing concerns over AI financing; the report said neither condition has materialized.
The report said market-implied odds of the Federal Reserve October raising interest rates have fallen from more than 50%to 14%。
The report said CoreWeave bonds have fallen into distressed territory, with its 5-year credit default swap spread implying an approximately 63%probability of default.
The latest weekly data show net inflows of 64400000000 USD into equity funds and net outflows of 53100000000 USD。
BofA private clients' equity allocation was 66.4%, while their cash allocation was 9.3%。
Hartnett said that if chip prices continue rising, he expects investors to return to technology stocks by mid-November; if prices decline, he believes bonds may outperform.
Hartnett is increasing allocations to small-cap stocks,REITs and consumer discretionary, while maintaining a long-term overweight in gold, commodities, and emerging markets.

AI-assisted interpretation

The following is analysis, separate from reported facts. Verify important claims independently.

The Bull & Bear Indicator falling below the sell threshold means only that the previous alert has been lifted; it does not mean the market has reached a clear buying point. Hartnett remains defensive for now, treating chip prices as an important signal for assessing whether funds may return to technology stocks: an increase corresponds to his scenario of returning to technology stocks, while a decline corresponds to a scenario of AI tighter credit conditions and potential bond outperformance.

Why it matters to readers

This view also involves technology stocks, semiconductors, bonds, and AI-related credit markets. The subsequent direction of chip prices may affect whether Hartnett changes his currently defensive allocation stance.

Beginners should distinguish between the end of a “sell signal” and the emergence of a “buy signal.” The position adjustments and market forecasts in the article are the strategist's views, not certain outcomes, and do not constitute direct trading advice.

Risks and unknowns

The content is BlockBeats' summary of the Flow Show report; the original report was not provided for verification.
Whether semiconductor prices will rise or fall in the future remains uncertain.
Whether investors will return to technology stocks by mid-November is a conditional forecast.
Whether the Federal Reserve will October 28 raise interest rates and whether AI funding concerns will ease remains uncertain.

BofA's Hartnett says Bull & Bear Indicator falls below 8; technology-stock sell signal ends, but stance remains defensive

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