franckreporter Michael Hartnett, chief investment strategist at BofA, said market corrections caused by “exogenous shocks at time of excess bullishness” typically end when a few conditions are met—and current price action hits at a few already happening. The first condition is when the “oversold” assets trough, reaching their lowest point in a market cycle or price movement. According to Hartnett,...
franckreporter Michael Hartnett, chief investment strategist at BofA, said market corrections caused by “exogenous shocks at time of excess bullishness” typically end when a few conditions are met—and current price action hits at a few already happening. The first condition is when the “oversold” assets trough, reaching their lowest point in a market cycle or price movement. According to Hartnett, this is happening in software ( IGPT ), ( XSW ), ( IGV ), the Magnificent Seven stocks ( AAPL ), ( AMZN ), ( MSFT ), ( NVDA ), ( TSLA ), ( GOOGL ), ( META ), private credit, bank loans, and Bitcoin ( BTC-USD ). The second condition is met when the “overbought” assets sell. He said this is happening with gold ( XAUUSD:CUR ), ( GLD ), ( IAU ), ( SGOL ), ( OUNZ ), semiconductors ( SMH ), ( SOXX ), ( SOXL ), emerging markets ( EEM ), ( IEMG ), ( VWO ), European stocks ( VGK ), ( IEV ), ( IEUR ), and banks ( KBE ), ( KBWB ), ( KRE ). Third, when the “safe havens"—such as oil ( CL1:COM ), ( CO1:COM ) and the U.S. dollar ( DXY )—lose bid. Hartnett said that current price action is hinting that the first and second conditions are starting to happen, but oil and the U.S. dollar still “needed to give all-clear.” “Don’t expect big trading upside from here given yet to see proper price flush lower,” he added. He noted that the 100 top stocks within the S&P 500 ( SP500 ) are seeing a “peak liquidity” theme deepening with a December peak in global central bank cuts, which is pricing out 2026 interest rate cuts—the probability of a June 17 Fed cut was 100% back in Jan. 1; it is now 37%—flattening the yield curve and causing a potential inflationary oil shock. Global central bank policy rate cuts (24-month cumulative) (BofA Global Investment Strategy, Bloomberg ) More on the markets Early Impact Of Iran War Is Low, But Economic Risks Are Rising Did South Korea Just Pop The AI Bubble? February Jobs Report: Payrolls Decline As Strikes Impact Healthcare Sector U.S. stocks' decline persists a...