Bank of America said there is a risk that global stock markets will overheat. The bank's so-called “global breadth rule” shows that about 71% of stock indexes are above the 50-day and 200-day moving averages.
Bank of America strategist Michael Hartnett said that there is a risk that global stock markets will overheat. The bank's so-called “global breadth rule” shows that about 71% of stock indexes are above the 50-day and 200-day moving averages.
Hartnett indicated that the index above 88% would trigger a reverse sell signal. This strategist has a more neutral attitude towards the stock market this year. He is generally bearish in 2023, although the S&P 500 index rose 24% at the time.
After faltering in April, the Morgan Stanley Capital International Global Index hit a record high again in May, as the market is optimistic that the Federal Reserve will start cutting interest rates later this year.
According to the data, the trading price of about 68% of the index's constituent stocks is higher than the 200-day moving average. The scope of this round of increase is not limited to US tech giants.
However, the index declined this week, as strong economic data raised new doubts about the prospects for monetary easing. This global benchmark index is expected to experience its first weekly decline in five weeks.
Barclays said that the stock market rally was beginning to “look a bit weak.” The bank wrote in a report that as the corporate earnings season comes to an end, tight positions and seasonal trends may cause the stock market to stagnate.
Meanwhile, the Bank of America report, citing EPFR Global data, showed that all major asset classes recorded inflows for the week ending May 22. Global equity funds increased by $10.5 billion, and bond funds increased by $12.5 billion.
Editor/Jeffrey