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Bank of America has told investors to take profits. 7 of its 10 bear market signals are flashing. This is the average count before every major downturn since 1990.
However, one crypto gauge fired even earlier.
What the Bank of America’s Stock Market Warning Says
The warning came in a June 5 note from Savita Subramanian, the bank’s head of US equity strategy. Its title was blunt: “Too many red flags. Take profits.”
BofA tracks ten conditions that usually appear before markets peak. Four had fired by March. Seven by May. The S&P 500 fell 2.6% that Friday, its worst day since October.
The triggers include tighter bank lending, gloomy consumers, a dealmaking boom, and an index that screens expensive on 17 of 20 measures.
Still, it is not a sell-everything call.
“We see opportunity in S&P 500 stocks, but not the overall cap-weighted index,” Subramanian wrote.
What the Warning Means
In plain terms, stocks are priced for perfection, a few giants carry the market, and money is getting harder to borrow. That mix has ended badly before.
BofA does not track crypto. Yet crypto has often cracked two to six weeks before stock market tops. The exclusive Crypto Canary Composite measures that stress.
Crypto Canary Composite: Charlie Quant LabThe gauge reads 69.1, inside its warning band. Bitcoin’s drawdown stress is at its maximum. Stablecoin supply is shrinking, and cash is leaving crypto. And Bitcoin still trades in step with stocks, so the stress can spread.
If the pattern holds, the risk window runs into mid-July. The signal is suggestive, not predictive.
What the Charts Show
Expensive stocks are beating cheap ones by a rare margin. The gap between growth and value hit a z-score of 2.89 in early June. Readings above 2 are rare. It has since cooled to 1.12, which could signal relief or the start of a larger unwind.
Growth Versus Value Z-Score: TradingViewEven inside tech, the gap between the best and worst stocks is the widest since February 2000.
Leadership is also narrow. The regular S&P 500 (SPY) versus its equal-weighted twin (RSP) peaked near 3.67 in mid-May. It now sits at 3.52, just above its 200-day average. A close below would hand leadership to the average stock, the trade Subramanian prefers.
S&P Concentration Ratio Test: TradingViewTech cash is the third strain. The four biggest AI builders now spend about 71 cents of every dollar they earn on data centers. Amazon spends more than it makes.
BofA sees the group near 100% by year-end, when buybacks stop and share sales start. Alphabet just raised over $80 billion.
Hyperscaler Capex Pressure Index: Charlie Quant LabThe Levels That Decide It
The S&P 500 topped near 7,621 in early June and now trades near 7,387. It has lost its 20-day average at 7,442 — the first crack in the trend.
S&P 500 Daily Chart: TradingViewBofA’s 7,100 target is the line that matters. It sits beside the 100-day average at 7,082 and chart support at 7,110. That is the bulls’ defense.
Not everyone agrees. Morgan Stanley’s Michael Wilson calls the pullback healthy within a year-end bull case. The first test of the stock market warning comes fast: an inflation report expected near 4.2%.
The index sits between the 7,621 record and the 7,100 line. Whichever breaks first settles it.
The post Inside Bank of America’s Stock Market Warning: Everyone Missed This Crypto Link appeared first on BeInCrypto.
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