Investors should sell stocks and raise cash as bearish indicators pile-up for the S&P 500, BofA says

0 0
Read Time:1 Minute, 51 Second
NYSE Trader
  • Investors should sell stocks and raise cash as the S&P 500 pushes up against the 4,400 level, Bank of America said in a note on Tuesday.
  • The bank sees bearish technical indicators piling up for the index as negative divergences persist.
  • “Sell strength into the 4,400s, especially with the arrival of bearish August-October seasonality next week,” BofA said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Investors should take advantage of any strength in the S&P 500 and sell stocks to raise cash as bearish indicators begin to pile up, Bank of America said in a note on Tuesday.

The bank points to negative divergences and a deterioration in market breadth, or upside participation of stocks in the market, as reasons to sell when the S&P 500 pushes up against the 4,400 level. In recent weeks, most gains in the stock market have been driven by a narrow group of companies including mega-cap tech names like Alphabet, Amazon, and Apple.

“We continue to flag lower highs from the S&P 500, NYSE stocks, NYSE all issues and US top 15 most active advance-decline lines moving into late July,” BofA explained.

Advertisements

The arrival of bearish seasonality in the stock market is another reason to sell into strength, according to the note. “Sell strength into the 4,400s, especially with the arrival of bearish August – October seasonality next week,” BofA said.

The S&P 500 could find support around 4250 and 4100 if stocks begin to turn lower, representing potential downside of 3% and 7% from Wednesday’s close.

Along with the bearish divergences and weak seasonality, margin debt has soared to a record high of $882 billion in June. This represents an elevated risk for US stocks if margin debt ultimately peaks.

“Although peaks in margin debt don’t always coincide with highs for the S&P 500, they tend to be bearish for US equities,” BofA said.

BofA margin debt

https://markets.businessinsider.com/news/stocks/stock-market-technical-analysis-sell-stocks-amid-bearish-signs-sp500-2021-7

To Find More Information, Go To Saubio Digital And Look Up Any Topic

About Post Author

Saubio admin

A Saubio member. So SAUBIO stands for GOOD LIFE which is what we all strive for as human beings, for ourselves, our family and our relationships with the people around us and the world we live in.
Happy
Happy
0 %
Sad
Sad
0 %
Excited
Excited
0 %
Sleepy
Sleepy
0 %
Angry
Angry
0 %
Surprise
Surprise
0 %
Advertisements