BofA Flags 8.5 Bull-Bear Signal, Urges Bonds and Defensives for a Post-Bubble Market
Updated
Updated · Business Insider · Jun 1
BofA Flags 8.5 Bull-Bear Signal, Urges Bonds and Defensives for a Post-Bubble Market
5 articles · Updated · Business Insider · Jun 1
Michael Hartnett told clients to prepare for a post-bubble regime with long bonds and defensive equity exposure, naming consumer staples, financials and healthcare as likely outperformers.
His warning rests on stretched market conditions: the top 10 stocks now make up about 40% of the S&P 500, only 21 constituents are at new highs, and 331 trade at least 20% below their peaks.
BofA's Bull/Bear Indicator has climbed to 8.5—an 'extreme bullish' reading the bank treats as a contrarian sell signal—while the S&P 500's trailing P/E sits in the high 20s.
Fed tightening is the main risk that could puncture the bubble, Hartnett said, with higher oil prices threatening inflation and markets pricing a 44% chance rates are at least 25 basis points higher by December.
Drawing on post-mania periods since 1929, Hartnett also pointed to small-cap tech and growth stocks as potential winners as the AI trade broadens from chipmakers to adopters.
As tech giants turn to massive debt to fund AI, is the market ignoring the real crash signal?
With AI driving record productivity gains, are bubble warnings just noise before a new economic boom?
Extreme Greed Alert: BofA Bull-Bear Indicator Flashes Sell Signal at 8.5 in June 2026
Overview
In June 2026, Bank of America’s Bull-Bear Indicator reached 8.5, triggering a major 'Sell Signal' for the market. This alert comes after investor sentiment hit 'extreme greed' levels earlier in January, when global optimism soared to highs not seen since 2001 and pushed the indicator into its danger zone. As a result, investors are advised to shift from a 'buy the dip' approach to a 'sell the rip' strategy, preparing for increased short-term volatility. The report highlights that this warning is driven by growing complacency among investors and signals the need for greater caution in the current market environment.