Bank of America is telling clients to fade S&P 500 rally above 4550

Global stock funds have witnessed substantial inflows, attracting $23.5 billion in the week ending November 15, marking the second-largest inflow of the year, according to Bank of America’s note referencing EPFR Global data.

Within this, money market funds received a significant influx of $20.5 billion, while bond funds saw an inflow of $2.6 billion.

Analysts at BofA urged the broker’s clients to start “fading” the above 4550.

The S&P 500 staged an “epic risk rally” recently, adding about 10% in a matter of days. The index closed at 4,508.24 on Thursday.

Bank of America’s bull and bear indicator has signaled a contrarian “buy signal” for the fifth consecutive week. Historically, a median of 1-3% gains based on such signals over the past 20 years would imply the S&P 500 reaching 4,550 points, just under 1% above its latest close.

In terms of regional trends, U.S. stock funds have experienced a fifth consecutive week of inflows, totaling $25.8 billion, while Europe continues to witness outflows for the 36th consecutive week.

In the sector breakdown, technology leads in terms of inflows, while health care and utilities face the largest redemptions. Additionally, U.S. large-cap stocks have seen the most significant additions since February 2022.