Bank of America strategists are urging investors to step back from risk assets, warning that current levels of market bullishness have reached their highest point since 2021.
The bank’s latest client note frames this extreme sentiment as a contrarian signal to reduce exposure to equities and rotate capital into less vulnerable investments.
The advice represents a notable shift in tone for the bank’s trading desk.
Just days ago, Bank of America was advising clients to purchase US momentum stocks, betting that the sector had reached an attractive entry point following a wave of profit-taking.
The rapid reversal underscores the volatility of current positioning metrics and suggests that the bank’s internal models now view the rally as overextended.
This caution aligns with broader warnings from the bank’s global strategy team, which has previously advised reducing aggressive purchases of US equities due to elevated positioning and a lack of viable defensive alternatives.