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BofA’s Hartnett Warns Overbought Global Stocks Face Sell Signal

(Bloomberg) -- Global equities are flashing an overbought warning, with moving averages already at levels that historically mark a sell signal for risk assets, according to strategists at Bank of America Corp.

Some 89% of MSCI stock indexes traded above their 50-day and 200-day moving averages in the week ended Jan. 28, a team led by Michael Hartnett wrote in a note. That breached the 88% threshold that they view as a sell signal.

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The stretched positioning coincides with investors pulling $15.4 billion from equity funds over the week, the BofA strategists said, underscoring increased caution as stock markets pushed higher. The MSCI World Index hit an all-time high on Jan. 27 and is on track for its strongest month since September.

BofA’s bull-and-bear indicator still shows “extreme” bullishness among investors, as strong breadth in global stock indexes and a robust credit market have so far offset the equity outflows, Hartnett wrote.

Meanwhile, flows to US equity funds have resumed, with $9.2 billion attracted during the week in focus. Europe registered its first outflows in seven weeks at $400 million, the BofA team said, citing data from EPFR Global.

Hartnett said his favorite trades for 2026 are going long bonds, international stocks and gold. His preference for international equities since late 2024 proved prescient as the US underperformed.

--With assistance from Michael Msika and Sagarika Jaisinghani.