Stocks Are Rallying. BofA Says It's Time to Take Profits.
BofA strategists led by Savita Subramanian say there are "too many red flags" — with 70% of their bear market signals now lit and the S&P 500 looking expensive on 17 of 20 valuation metrics. The warning lands as equities keep climbing.
TL;DR
Even as U.S. equities extend their rebound from recent turbulence, Bank of America strategists say the rally is flashing too many warning signs — and they're telling clients to take profits.
- BofA strategists led by Savita Subramanian flagged "too many red flags" in a June 5 report, recommending profit-taking
- Roughly 70% of the firm's bear market signals have now been triggered — a level historically associated with market tops
- The S&P 500 looks "statistically expensive" on 17 of 20 valuation metrics
- Eight of those metrics are running hotter than levels seen during parts of the dot-com bubble
- Meanwhile, U.S. stocks continue to recover from their earlier selloff
Even as U.S. stocks continue rebounding from a stretch of sharp volatility, strategists at BofA Securities (BAC) are sounding a different note. According to multiple reports, the team warned in a recent note that a growing number of "bear market signposts" suggest the market is nearing a top — and urged investors to take profits.[Bloomberg]
What the Report Said
In a June 5 note, Savita Subramanian and her team at BofA Securities wrote that there are "too many red flags" in the market and advised clients to take profits.[Yahoo Finance]
The specifics:
- Roughly 70% of BofA's bear market signals have been triggered recently — broadly in line with what the firm has historically observed near market peaks.[Yahoo Finance]
- Those signposts span a wide range of market data, including consumer confidence, expectations for equity returns, credit stress, and tightening lending conditions.
- The S&P 500 looks "statistically expensive" on 17 of 20 valuation metrics — and eight of those are running above levels seen during parts of the dot-com bubble.[TipRanks]
Wall Street's Warning vs. the Tape
The timing is notable. According to Bloomberg, BofA issued its "nearing a top" warning even as equities were actively extending their rebound from a prior selloff.[Bloomberg] In other words, institutional caution and near-term market momentum are pointing in opposite directions.
It's worth keeping in mind that "bear market signposts" and valuation calls reflect BofA's own analytical framework — other firms read the same data differently. These signals speak to statistical probabilities, not certainties about where prices go next.
Context: Valuations and Rates
BofA's warning sits at the intersection of two ongoing debates. On valuations: after a sustained run higher, several S&P 500 metrics are near historic extremes — a thread running through broader concerns about how far AI and tech have stretched. On rates: the strong May jobs report released June 5 reinforced "higher for longer" expectations; per the CME FedWatch tool, markets are now pricing roughly 70% odds of a Fed rate hike before end-2026.[CNBC] A higher-rate backdrop typically compresses multiples on richly valued assets.
For investors, sell-side strategy notes like this one are one input among many. Where the market goes from here will depend on inflation prints, earnings, and flows. The next key data points are May CPI and PPI later this week, followed by the Fed's upcoming policy meeting.
Sources
This content is for informational purposes only and does not constitute investment advice, trading advice, or any guarantee of returns.
