Things may be getting dicey for the stock market. Bank of America chief investment strategist Michael Hartnett pointed out that inflows into global equities and high-yield bonds over the past four weeks make up 0.9% of assets under management for the company’s clients. That’s dangerously close to triggering a contrarian sell signal. “When inflows to global equities & high yield bonds > 1.0% of AUM in 4 weeks … sell,” he said in his weekly Flow Show note to clients. He noted that the signal will flash “if global equity fund inflows > $20bn and HY bond inflows > $1.5bn next week.” The major averages have had a record-setting week. The S & P 500 this week topped 6,700 for the first time. The Nasdaq Composite is 0.7% away from reaching 23,000 through Thursday’s close. The Dow Jones Industrial Average set an all-time closing high of 46,519.72. .SPX YTD mountain SPX year to date That said, with investors piling into risky assets such as stocks and high-yield bonds, it may be a sign that equities are due for a pullback. On top of that, another potential sell signal is close to being flashed. The S & P 500’s relative strength index is sitting at 69 as of Thursday’s close. When an asset or index reaches an RSI of 70 or greater, it enters oversold territory, signaling investors it may be due for a pullback. To be sure, investors and traders still see reasons to stay long equities. “The market from a valuation standpoint is expensive, but the market has double-digit earnings growth, free cash flow growth of mid teens … companies are buying back a ton of stock, you have margin expansion,” said Thorne Perkin, president of Papamarkou Wellner Perkin. “I think you’re going to see the market tick up into the end of the year.” Gregory Faranello, head of U.S. rates strategy at AmeriVet Securities, also pointed out that volatility across asset classes has “come down a lot” from the beginning of the year, “which is constructive for equities.” “But with markets at these levels, you do start to get a little nervous,” he said. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
A trading rule measuring stock flows is about to trigger a sell signal
Oct 3, 2025
