Shares continued to advance final week, with the S&P 500 hitting its highest stage since early March. Nonetheless, whereas US equities have now recovered virtually two-thirds of their coronavirus-related losses, fund managers proceed to assume we’re in a bear market rally. The newest Bank of America fund supervisor survey is placing in its pessimism. Simply 10 per cent anticipate a V-shaped financial restoration, in comparison with 75 per cent who envisage a U- or W-shaped restoration. Solely 25 per cent assume this can be a new bull market, whereas 68 per cent assume it’s a bear market rally.
Money ranges are approach above their 10-year common and stay in touching distance of their highest stage because the 9/11 terrorist assaults of 2001. The bank’s Bull & Bear Indicator is at 0, denoting excessive ranges of bearishness. It’s essential to recollect the survey is considered as a contrarian indicator; excessive bearishness means many traders aren’t positioned for unexpectedly excellent news. After all, shares are technically over-bought proper now, however the survey bears out a current Morgan Stanley be aware which pointed to cautious investor sentiment as a purpose to anticipate shares won’t now file sharp declines.
Each retail and institutional traders are “conservatively invested”, the be aware mentioned, “with cash on the sidelines that would likely be put to work in a sell-off, potentially creating a floor under stock prices”. Or, as Bank of America places it, the “pain trade” for shares remains to be up.