A Bank of America strategist is warning about the stock market, warning that equities are bright indicators that often show a correction of 20%.
In a business note, BofA’s head of equity and US strategy, Savita Subramanian, urges investors to “take advantage,” warning that she is seeing “a lot of red flags” in the market, reports Axios.
“Our bear market indicators – the triggers that usually lead the S&P 500’s interest rate – are showing increased caution. Today, 70% of our signals are triggered, in line with what was seen in the stock market.”
Subramanian says the signs are a reflection of market conditions, including investors’ view that companies will continue to generate strong profits in the coming years, as well as debt repayments. He also points out that he sees a wide spread in the performance of stocks with high and low prices, meaning that high-priced stocks are being paid for, while low-priced stocks are being left behind.
“Dispersion is most pronounced within Tech, where the spread between the middle/highest performing quintiles is +120 (percent), the highest since Feb. 2000, which reached +130 (percent) ahead of the market’s peak on March 24, 2000.”
Meanwhile, Morgan Stanley CIO Mike Wilson says he doesn’t believe the stock market will enter bear territory. He says, “In our opinion, the correction was inevitable and in the end it was good if this bull market continues until the end of the year, which will remain our base.”
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