Bank of America Bull & Bear Indicator Hits 9.6, Highest Since 2021, Signaling Market Overheating

According to Bank of America, the bank's Bull & Bear Indicator rose to 9.6 last Friday (July 24), marking its highest level since the pandemic recovery peak in 2021. The indicator, which measures investor sentiment through reverse logic, triggered a "sell" signal, suggesting the market has become overheated as investors turn overly optimistic.

Historically, the indicator has triggered 17 sell signals since 2002. Following such signals, global equities have typically declined 2–3% on average within three months, with maximum drawdowns ranging between 15–20%, according to the bank's strategy team led by Chief Strategist Michael Hartnett.