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Irrational Exuberance – FLASHBACK!




Last week Bank of America Merrill Lynch (BofAML) released a research note that its “Bull & Bear” indicator was sending a sell signal “which has been accurate 11 straight times” since the firm started tracking it in 2002.  The latest event to trigger the signal was the $33.2 billion that investors poured into stock-based funds the week before.  While normally inflows are healthy for the market, they can be seen as a contrary indicator when they reach extremes of excess.  The current reading on the indicator of 8.6 is firmly above the level of 8 established by BofAML as the “Sell” point. 

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