BofA warns traders: ‘Everyone now expects big year-end rally’

Money market funds continue to attract the majority of inflows, with total inflows reaching an annualized basis of $1.3 trillion, according to BofA equity strategists.

In the week ending November 1, cash funds received $64.2 billion in inflows, bonds saw their fourth consecutive week of inflows at $4.5 billion, while $3.4 billion exited equity funds, and $81 million left gold funds, according to the data provided by EPFR Global.

The analysts note that the BofA Bull & Bear Indicator has dropped to 1.4, the lowest level since November 2022. This decline in the indicator sends a contrarian “buy” signal for the third consecutive week.

Strategists also highlight that oil is trading below $100, yields are below 5%, and the is above 4,200.

“Technicals no longer preventing positioning from working…but note everyone now expects big year-end rally,” the analysts said in a client note.

BofA also notes signs of “capitulation” in emerging markets, with the largest redemption in EM debt and equities since June 2022.

Regarding regional breakdowns, the U.S. saw its third consecutive week of inflows at $500 million, while EMs had their fourth consecutive week of outflows, with $2.8 billion exiting.

Japan had its second week of inflows at $900 million, and Europe had its 34th consecutive week of outflows at $1 billion.