Bank of America: Global stock markets are close to triggering a sell signal

Global equity markets are about to trigger a technical "sell" signal after hitting record highs this week, Bank of America strategist Michael Hartnett has warned. He said the market is currently running overheated after surging 20% in just two months. He cited data on money flows and market breadth as evidence that investors are piling into risky assets and taking oversized positions. Traders often use this as a bearish signal because in theory it can indicate that market purchasing power may soon be exhausted and prices could easily pull back. Hartnett cited data showing that inflows into equities and high-yield bonds accounted for 0.9% of total assets over the past four weeks. He said if that figure rose above 1%, it would be a sign that investors are selling. At the same time, the market is approaching "overbought territory". About 84 per cent of national indices are above their 50-day and 200-day moving averages. He says his sell trigger will be reached when the indicator hits 88 per cent.