Bank of America: The fall of Wall Street still has a long way to go

The BofA Securities market trend index fell to zero for the first time since the chaos brought by the pandemic in early 2020, marking an extreme bear market area as investors got rid of credit assets and cryptocurrencies.

What’s more, even though the big Wall Street index S&P 500 confirmed the current bear market week starting in January, and many European indices have already fallen more than 20% from their highs this year, equity investment positions remain extremely high which suggests greater losses for the sequel.

In particular, in a weekly note from Bank of America on investment flows in various asset categories, the US Investment Bank points out that as of January 2020, for every $ 100 of inflows, there were $ 35 outflows of debt assets and zero of stocks.

Investors “capitulated” to the debt and cryptocurrency markets but not to equities, according to BofA Securities analysts led by Michael Hartnett. “That’s why we’re worried that stock lows have not yet come.”

In general, various technical indicators of the stock markets indicate that bigger losses are imminent.

According to the American bank, a US index, which includes shares listed abroad, ETF bonds and domestic securities, is on its 200-week moving average. A close below this level would lead him to four-year lows.

At the same time, the Nasdaq Composite Index, once “flying”, is now trading close to its own 200-week moving average, below which it had to trade since the global financial crisis in 2008, according to Refinitiv.

Global stocks have gone through one of the most turbulent weeks in economic history, amid aggressive monetary tightening by central banks around the world.

Specifically, MSCI had fallen 5.7% for the four days, heading for its biggest weekly drop in more than two years.

The shares of the world have lost 20 trillion. capitalization dollars this year.

At the same time, the largest cryptocurrency, bitcoin, has lost more than half of its value from this year’s high of $ 48,234 on March 28, now moving to $ 21,000.

According to the analysis of BofA, in the week to Wednesday the share capital in the USA attracted 16.6 billion dollars, while the bonds recorded their biggest outflows since April 2020, amounting to 18.5 billion dollars.

Overall, equity in the US has shown net inflows in the last six weeks, while in Japan there have been outflows in the last four. Respectively, Europe has seen outflows in the last 18 weeks.