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Jan. 26, 2018, 12:08 p.m. EST

‘FOMO’ stock market sees a week of record inflows

BofAML Bull & Bear indicator on cusp of sell signal

By William Watts, MarketWatch


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Investors continue to join the rally.

Global equities scored a record inflow of $33.2 billion in the week of January 24, Bank of America Merrill Lynch analysts said in their weekly “Flow Show” report on Friday.

They labeled the strong flows, with $21.1 billion going to exchange-traded funds and a record $12.2 billion rolling into mutual funds, a “nonstop euphoric cabaret,” while the firm’s proprietary Bull & Bear Indicator” rose to 7.9 (see chart below). A reading of 8.0 would put the indicator in “extreme bullish” territory, which Bank of America Merrill Lynch treats as a sell signal.

Meanwhile, the flow into equities come as investors stream out of credit, with the flow into equities versus high-yield redemptions running at an all-time high (see chart below).

The S&P 500 index (S&P:SPX)  and Dow Jones Industrial Average (DOW:DJIA)  notched another round of all-time highs on Friday as stocks threatened to continue a run of record closes. The S&P is up 6.7% so far in January, in a rally attributed to strength in corporate earnings, synchronized global economic growth and investors finally drawn to the bull market on fears of missing out, or FOMO.

Link to MarketWatch's Slice.