© Reuters. No Full Capitulation on Wall Road But – Financial institution of America
By Senad Karaahmetovic
Financial institution of America strategist Jill Carey Corridor famous that flows are getting an increasing number of defensive after the hit a contemporary year-to-end (YTD) low final week.
The index closed virtually 3% decrease final week, throughout which BofA’s purchasers have been internet consumers of U.S. equities for the fourth week. The shopping for exercise was largely focused on ETFs, which noticed the most important influx since December. Excluding ETFs, BofA’s purchasers bought shares for the primary time in over a month.
Retail and hedge funds have been internet consumers of U.S. shares whereas institutional purchasers have been sellers. 9 sectors noticed outflows, led by Well being Care, Industrials, and Financials. Alternatively, solely Communication Providers and Tech witnessed inflows.
“Whereas shopper flows had tilted cyclical>defensive for many of this yr, we’ve seen the alternative pattern since mid-August, with outflows from cyclicals vs. inflows into defensives most weeks, and greater gross sales of cyclicals than defensives final week,” Carey Corridor mentioned in a shopper be aware.
Regardless of massive promoting, Carey Corridor notes that internet gross sales of single shares by retail purchasers are nonetheless not excessive.
“Excessive gross sales by this group (-1 or -2 customary deviation occasions) have usually been a extra constant sign for near-term S&P 500 returns than when flows have been at present ranges, significantly -2 customary deviations, the place subsequent 1mo. /3mo. S&P 500 returns have been optimistic 78%/84% of the time (vs. 64%/71% for all weeks since 2008), with avg. 1mo./3mo. returns of 1.0%/5.1% (vs. 0.7%/2.1% for all weeks since 2008),” Carey Corridor additional added in a be aware.
Internet-net, the strategist nonetheless doesn’t see indicators of “full capitulation on Wall Road.”