This is mainly seen as a sentiment indicator but in other words, it is hinting that we are approaching peak bearishness in markets. That doesn’t quite signal that the selloff may be over but given the pace of the market decline in recent weeks, one can argue that we are perhaps overdue for a technical breather as well.
BofA notes that last week observed $5.2 billion exiting world equities funds, while global bond funds saw $12.3 billion leave – marking a seventh straight week of outflows.
For some context, the BofA ‚Bull & Bear‘ indicator hints at an „unambiguous contrarian buy“ when it falls below 2.0: