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Bank Of America Warns: "Too Few Bears Out There", "Investors Not Prepared" For Selloff

Tyler Durden's picture


There is one main reason why complacency is bad: selloffs. Because as Bank of America explains, in an environment in which there are "too few bears", and where investors are "not prepared for a downside correction", when you do finally get a sell off for whatever reason, with nobody hedged and otherwise prepared for such an outcome, the only logical continuation is piling on until one gets selling exhaustion. And in a world in which hedge fund leverage is about 500%, by the time exhaustion comes, there will be very few left standing.

From Bank of America:

Sentiment an equity market risk: II % Bears dropped to 14.1% = too few bears

Even with the increased volatility since mid-January, there are still too few bears out there based on Investors Intelligence (II) % Bears. The most recent survey reading as of January 24 was 15.3% vs. 15.1% the prior week. This is complacent and contrarian bearish from a sentiment standpoint. With II % Bulls moving down to 53.1% from 57.6%, the bulls did reign in their horns, but not enough to move II % Correction to a contrarian bullish level that would suggest that too many investors are looking for a correction. As of December 20, 2013, Investors Intelligence (II) % Bears extended deep into contrarian bearish territory below the 20% level hitting a 14.1% - the lowest level for II % Bears since March 1987. II % Bulls moved up to 61.6% as of December 27, 2013 - the highest level since October 2007. Sentiment is an equity market risk and confirms the complacent readings for the 5-day put/call ratios .

Put-call ratios are complacent & contrarian bearish

Both the 5-day and 25-day CBOE Total put/call ratios are overbought and contrarian bearish. The 5-day total put/call ratio reached the lowest level since early 2010 while the 25-day total put/call reached the lowest level since early late 2004. These put/call ratios are at levels that suggest investors are not prepared for a downside correction. In terms of market sentiment, this is contrarian bearish.


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Tue, 02/04/2014 - 09:26 | 4399670 SheepDog-One
SheepDog-One's picture

What? BTFDers 'not prepared' to lose their asses? Oh well.

Tue, 02/04/2014 - 09:31 | 4399685 Temporalist
Temporalist's picture

You can get some special shoes for that. 

Tue, 02/04/2014 - 09:39 | 4399708 TeamDepends
TeamDepends's picture

Tyler, perhaps you could run an updated chart of the Great Depression Dow vs todays.  If indeed the crash has begun, the 1/14 prediction was only a few days early and on a graph of years, a couple days is nothing.

Tue, 02/04/2014 - 10:07 | 4399795 The Fonz
The Fonz's picture

The way that chart is normalized makes this market seem as over extended as 1929 was. It's not even close, not even as over extended as 2000. I am short and mKing money, but playing for end times is a money loser.

Tue, 02/04/2014 - 13:00 | 4400493 Fish Gone Bad
Fish Gone Bad's picture

but playing for end times is a money loser.

That my friend is well spoken.  I will have to add that to my list of quotes.

You always lose when you bet against yourself.

Fish Gone Bad

Tue, 02/04/2014 - 09:34 | 4399697 kridkrid
kridkrid's picture

"Size don't mean shit" - My Dad. I can trace my ancestry all the way back to Napoleon (complex).

Tue, 02/04/2014 - 09:36 | 4399699 negative rates
negative rates's picture

Where's the hell is the hearst? I'm about to carry trade the cart yellen "Bring out ur dead"

Tue, 02/04/2014 - 09:52 | 4399748 max2205
max2205's picture

And why now are we getting self serving reports out of citibank and boa....the fed just wants the 5 and ten year down to where they can run stocks again

Tue, 02/04/2014 - 09:28 | 4399675 Headbanger
Headbanger's picture

WTF!?  They're just figuring this out when it's been discussed here for months now!

Tue, 02/04/2014 - 09:31 | 4399679 kridkrid
kridkrid's picture

Yesterday it was Deutsche Bank, today it's Bank of America. I'll say the same thing today.... Of course they aren't just figuring it out. The news isn't that they are figuring it out, the news is why are they saying so now?

Tue, 02/04/2014 - 09:37 | 4399702 wallstreetapost...
wallstreetaposteriori's picture

Noone wanted to admit last year because bonuses looked so good for the first time in years.  

Tue, 02/04/2014 - 09:45 | 4399722 NoDebt
NoDebt's picture

When FCOJ hits 132, sell like mad.  (Trading Places)

Somebody knows something.

Tue, 02/04/2014 - 09:55 | 4399752 Headbanger
Headbanger's picture

I think they're saying it now because they know damn well a major crash is in progress here and so they're trying to save what little credibility they have with these warnings.

Tue, 02/04/2014 - 10:26 | 4399880 eclectic syncretist
eclectic syncretist's picture

They are saying it now because they've got all the suckers to buy in that they can and now it's time to take it down.  Wall street business as usual.  Naturally, there will be a couple of relief rallies when they once again tell everyone to buy back in and happy days are here again, but they'll be selling you those shares in anticipation of the next leg down. 

Tue, 02/04/2014 - 10:33 | 4399899 Mesquite
Mesquite's picture

The Great Washing Machine....

Some things never change...

Tue, 02/04/2014 - 09:40 | 4399706 DeadFred
DeadFred's picture

Those hedgies have a lot of assets. If I understand the mechanics, roughly speaking, at 500% leverage one day of the market closing after a 20% drop the hedge funds are broke. All your assets are belong to us! Therefore stirring up a bit of panic is good for the transfer of wealth plan. I'm sure I'm missing some details but I'm mainly surprised at why it took them soooo long to launch the plan

Tue, 02/04/2014 - 10:10 | 4399807 dontgoforit
dontgoforit's picture

They wanted to be sure the blow was fatal.

Tue, 02/04/2014 - 09:54 | 4399746 HelluvaEngineer
HelluvaEngineer's picture

I'm looking for a decent retracement before the big drop.  Something to get all the bulltards back in the game.

Tue, 02/04/2014 - 10:07 | 4399798 Al Huxley
Al Huxley's picture

All through 2008, huge down days followed by big spikes that sucked people into thinking 'that must have been the capitulation', then another huge drop.  Yeah, gonna be interesting.

Tue, 02/04/2014 - 09:33 | 4399686 SheepDog-One
SheepDog-One's picture

That's what it's all about being a sheep dog....trying to tell the sheeple to watch out for the Central Plansters they are NOT their friend but they never listen. They heard from a nice man on TV to 'BTFD'....sad kinda.

Tue, 02/04/2014 - 10:03 | 4399776 The Dunce
The Dunce's picture

The only way to do well in the stock market long term is through insider trading.  It's not a retail market.  Wall Street is a scam set up for the big boys.  The whole thing is rigged.

Tue, 02/04/2014 - 09:27 | 4399671 GetZeeGold
GetZeeGold's picture



"Investors Not Prepared"


How much time do you think they might need?

Tue, 02/04/2014 - 09:35 | 4399696 Bangin7GramRocks
Bangin7GramRocks's picture

Why should they prepare. It's been proven time and time again that the sweet gubmint bossum will be there to suck on should any trouble arise. There will be no crash because it's all controlled and orchestrated by the Fed.

Tue, 02/04/2014 - 09:37 | 4399703 Winston Churchill
Winston Churchill's picture

Til about 11 am this morning when margin clerks get to work.

Tue, 02/04/2014 - 09:26 | 4399673 firstdivision
firstdivision's picture

I've been prepared, just not through the means of paper promises.

Tue, 02/04/2014 - 10:09 | 4399803 Sudden Debt
Sudden Debt's picture

Yeah... reminds me of that little note my wife put in my lunchbox when it was my birthday...

it said: "Good for one kinky wish"

guess what...

Tue, 02/04/2014 - 09:28 | 4399677 Dr. Engali
Dr. Engali's picture

"Investors"... Lol... I haven't seen one of those in a long time. Renters yes, investors no.

Tue, 02/04/2014 - 09:47 | 4399723 Haager
Haager's picture


Which is - in some other languages - this little fellow:

Tue, 02/04/2014 - 09:46 | 4399727 Dr. Engali
Dr. Engali's picture

Thanks my my bad.

Tue, 02/04/2014 - 09:54 | 4399747 satoshi911
satoshi911's picture

"INVESTORS", ... you mean "SUCKERS", surely there was never an "INVESTOR", hell even GOLDMAN-SACHS calls them "MUPPETS".


Tue, 02/04/2014 - 09:29 | 4399678 TideFighter
TideFighter's picture

"Who would win: Ditka or a real Bear. Ditka."

Tue, 02/04/2014 - 09:30 | 4399682 NOZZLE
NOZZLE's picture

so all this took was taking a mere 10 Billion out of the punch bowl?

Tue, 02/04/2014 - 09:30 | 4399683 bubblemania
bubblemania's picture


Tue, 02/04/2014 - 10:27 | 4399874 HRamos_3
HRamos_3's picture


Tue, 02/04/2014 - 09:30 | 4399684 satoshi911
satoshi911's picture

Rule-1 "Fuck the stock Market"

Rule-2 "Capital preservation, in all history making money is easy, keeping it is hard"


Funny, the ZH world only knows how to sell 'paper', paper-gold, paper-stock, ... toilet-paper,...

 Funny indeed when the PONZI goes down there is no buyers on the way down, funny indeed.


Fools and their money always separate, for 40+ years the US government KLEPTOCRACY has raped and robbed the 'fools' now there is NOBODY left to fuck, so now the fuckers have to fuck themselves,

Smart Men stay far away and watch. Go to Rule-2.


Tue, 02/04/2014 - 09:34 | 4399698 SheepDog-One
SheepDog-One's picture

ZH has had constant articles for years about the coming collapse and how to prepare for it.

Tue, 02/04/2014 - 09:52 | 4399736 satoshi911
satoshi911's picture

Tinfoil, check

Bitcoin, check

Butter or KY, check

beans, butter, and bullets, ... check


Still no way to live, ... run far from the USA if you want to live a normal life,e.g. far from a FEMA-CAMP


Tue, 02/04/2014 - 10:12 | 4399812 SheepDog-One
SheepDog-One's picture

Nah I'm to old to start running and hiding around the world like Jason Bourne....I guess I'll just be dealing with whatever right here.

Tue, 02/04/2014 - 10:34 | 4399910 Spastica Rex
Spastica Rex's picture

There's nowhere to run, anyway.


Tue, 02/04/2014 - 10:26 | 4399866 Proofreder
Proofreder's picture

Forgot the other basic food group -


Tue, 02/04/2014 - 14:53 | 4400909 TheReplacement
TheReplacement's picture


Tue, 02/04/2014 - 09:36 | 4399701 negative rates
negative rates's picture

Are the gays lining up now in a perpetual circle?

Tue, 02/04/2014 - 09:49 | 4399730 satoshi911
satoshi911's picture

Every year back in the day I would go to 'Saline Valley", in death valley a classic hot-spring area, every year 100's of SF guy's would come there and make fairy-rings around fire-pits, ...essentially if you can imagine 50-100 guys all butt-fucking each other in a continous circle, .. never mind I'm sure their  dead now ...

Don't worry they stayed to themselves, they didn't push their dicks on others and I sure wasnt interested, but nonetheless 'fairy-rings' and stock-market 2014 are same-same.


I liken to the stock-market of today to be the same, the good news is all these 'traders' and circle-jerkers, and stock-market whores, ... I would best guess in 5 years they all be dead. :)


Tue, 02/04/2014 - 09:52 | 4399745 negative rates
negative rates's picture

I'm guessin sooner than that.

Tue, 02/04/2014 - 10:42 | 4399941 mijev
mijev's picture

Thats a visual id like to get out of my brain.

Tue, 02/04/2014 - 11:48 | 4400224 fockewulf190
fockewulf190's picture

"Don't worry they stayed to themselves, they didn't push their dicks on others and I sure wasnt interested, but nonetheless 'fairy-rings' and stock-market 2014 are same-same."

Let me weren´t interested, but you just happened to have gotten a "shitty" assignment from the editor when you were working for The Village Voice.  Hope you got some professional help for your PTSD.

Tue, 02/04/2014 - 09:39 | 4399709 The Wisp
The Wisp's picture

plus #1

for the imagery of all the speculators trying to fuck each other because there are no Suckers left

Tue, 02/04/2014 - 09:43 | 4399719 foodisgood
foodisgood's picture

Sounds like a smart guy like you is so smart he can just use words to be smart.

But I am sure if confronted face to face and made to prove how smart you are you would use a pen on paper or your mouth to establish your worth.

Fuck wits who use claims to establish worth are the basis of the problems they claim to have overcome. 

Your rectum provides more value than anything you have claimed in this life - YES - you are sad but true to this.

Tue, 02/04/2014 - 09:56 | 4399759 BandGap
BandGap's picture

Just what the fuck are you talking about?

Tue, 02/04/2014 - 09:32 | 4399690 Rock the Casbah
Rock the Casbah's picture


Tue, 02/04/2014 - 09:35 | 4399692 put_peter
put_peter's picture

Is BofA trying to?


1) Cover their shorts?

2) Sell puts?

3) Buy calls?

4) Trying to front run their customers with this public announcement?

5) Cause panic selloff?


I'd vote for all of these, JMHO.

Tue, 02/04/2014 - 09:53 | 4399742 Oracle of Kypseli
Oracle of Kypseli's picture

Both articles from two big banks sent the same subliminal message in a different way.

Their Message: Better to buy stocks as the downturn is not coming any time soon. Sorry fellows! I am out. But I may tip toe into some puts.  

Tue, 02/04/2014 - 09:33 | 4399693 Seasmoke
Seasmoke's picture

Instead of stealing people's houses. BOA should Spend more time reading ZeroHedge. 

Tue, 02/04/2014 - 09:39 | 4399705 negative rates
negative rates's picture

They juggle hedges since they are not allowed to take critizisms.

Tue, 02/04/2014 - 09:54 | 4399749 irongator
irongator's picture

Careful what you wish for. They might find out who you are and vector their cronies in the government on you and yours. Good luck in the Brave New World!

Tue, 02/04/2014 - 09:35 | 4399694 Haager
Haager's picture

Not enough bears to STFR? Does that mean if noone can put the market down, it will pump up and explode?

BofA, those with the 'below 1750 means trouble' and '1776 is the line in the sand' prophecies. What's the point to add some bears by recruiting their members in an 'contrary bearish' sentiment?


Oh, hi Kermit, I didn't notice you earlier.

Tue, 02/04/2014 - 09:35 | 4399700 LawsofPhysics
LawsofPhysics's picture

Doublespeak, things must be much worse than previously thought.

Tue, 02/04/2014 - 09:39 | 4399710 wallstreetapost...
wallstreetaposteriori's picture

2014 just feels like 2000 and 2008 wrapped into one.  Blind euphoria + record breaking excessive leverage = a violent market crash 

Tue, 02/04/2014 - 09:45 | 4399725 SheepDog-One
SheepDog-One's picture

People around me are completely convinced that there's nothing to worry about and the Fed will step in any minute now and re-save their's unreal!

Tue, 02/04/2014 - 09:53 | 4399750 fonzannoon
fonzannoon's picture

i'm one of them sheep. If we go down another 3-4% from here I will rapidly change that tune. Maybe it will be too late by then. 

Tue, 02/04/2014 - 10:14 | 4399826 Al Huxley
Al Huxley's picture

I doubt it's straight down from here, but at a minimum it's taken the momentum out of the market and put an end to the 'the economy's so strong' bs for the moment, and pointed out the reality that the FED can't have it both ways - the market will buy their story, but only if the money pump backs it up, turn the hose off and nobody wants to play.

Tue, 02/04/2014 - 10:31 | 4399888 fonzannoon
fonzannoon's picture

agreed Al

Tue, 02/04/2014 - 11:47 | 4400229 SheepDog-One
SheepDog-One's picture

As long as the free money keeps flowing, then the illusion is all is well. Until that no longer works either.

Tue, 02/04/2014 - 09:44 | 4399721 BandGap
BandGap's picture

They know damn well they forced everyone into the Bull corner. Shit, even prominent Bears were saying, despite what they saw and felt, they had to join the herd in order to get the free QE handout.

Fuck, no one should be surprised here. They created a perfect environment by giving away money and slaughtering shorts.

And they abso-fucking-lutely have to keep the lid on PMs. They know that if there is even a whiff of actual supply and demand taking over that shit is going to explode. If psychology is the key to holding this together they know what they have to do. BUT they also MUST realize it is time to head to the lifeboats. And they want first dibs there.

I see the futures are up and the CAC is in the black. What's the odds this shit starts to crumble further?

Tue, 02/04/2014 - 09:38 | 4399707 the 300000000th...
the 300000000th percent's picture

I think I'm squared away on Comms now just got my HF station going. If they shut down the fringe internet when this thing gets bad. I'll still get the truth out of all the other parts of the world

Tue, 02/04/2014 - 09:41 | 4399713 SheepDog-One
SheepDog-One's picture

Blight of America banksters....hey can you 'tards at least spell check your articles before release? Makes it stink of panic.

Tue, 02/04/2014 - 09:40 | 4399716 fonzannoon
fonzannoon's picture

BofA just shaking the trees while they scale in and wait for the "get to work Mr. Yellen" announcement

Tue, 02/04/2014 - 09:53 | 4399724 Randoom Thought
Randoom Thought's picture

The banks that ABSOLUTLY CONTROL STOCK PRICES through their specialist firms, market makers, crony hedge funds, massive ownership positions and computer trading algorithms have propagated the myth that "the stock market" does not follow free market dynamics for a logical reason (and it does not follow free market dynamics based on sentiment because of fraud, manipulation and theft ... but they do not admit to their own crimes) and that logical reason is that the public is stupid and the insiders are smart. So when market sentiment is bullish and people are buying, according to Wall Street Banks, price should go down and when market sentiment is bearish and people are selling then according to Wall Street Banks price should go up.

In my opinion, this is absolute proof of manipulation theft and fraud. Banks have used their power over price to steal money from people who have been propagandizd to incorrectly believe that the stock market is a free market.

The above article is more evidence to the same. How DOES a bank have 100% perfect trading in a month if they do not ABSOLUTELY CONTROL PRICE and use that power to defraud other market participants? Will the banks ever be prosecuted for their theft and fraud? No. They control the money supply and can and apparently do create an infinite amount of money to bribe people to defend them.

Tue, 02/04/2014 - 09:55 | 4399756 Oracle of Kypseli
Oracle of Kypseli's picture

One of the weapons is education and information through alternative media on the net.

Tue, 02/04/2014 - 12:33 | 4400359 Randoom Thought
Randoom Thought's picture

Yes, but here is the mind****. What is one to think about alternative media when it is mainstream? Does it simply exist to enhance the dialectic and create fear and distrust? If so, why?

Normal people do not create money. They do not get media attention. They do not attract major advertisors, etc. Their blogs and sites get almost no attention and when discoverd, they are harassed mercilessly. It is only corporate appearing alternative media, such as ZH, that thrives. However, within those forums are some truths, particularly in comments from the users, that should be heeded.

What do I think of ZH, Infowars, ATS, Drudge, Activistpost ... Internet Porn and BITCOIN. They are all too mainstream to not be part of the plan. One only has to sit back and consider the consequences of what is laid before us to reveal the potential plans and future actions. Control comes from several things: Fear, hope, divide and conquier, dependence. A united people that are not dependent on self propagating authority have nothing to fear.

We are currently divided, We have too great of a dependence on the banks and government and our fear grows daily. They are succeeding. If followed to the logicla conclusion, change will eventually come when they push it too far and people no longer have anything to fear. It will be the loss of fear through desperation.

Tue, 02/04/2014 - 10:58 | 4399987 Waterfallsparkles
Waterfallsparkles's picture

Do not forget their Analysis's that come out and upgrade a Stock after they have accumulated a large enough positon or calls.

Tue, 02/04/2014 - 13:15 | 4400544 tradebot
tradebot's picture

The sheeples biggest problem is they still believe the establishment is being honest with them.  Nothing to fear folks.

Tue, 02/04/2014 - 21:26 | 4402307 MeelionDollerBogus
MeelionDollerBogus's picture

wait, you mean people put money in banks and trust their retirement to bankers,
even AFTER being robbed by bankers?

Tue, 02/04/2014 - 10:01 | 4399770 gwar5
gwar5's picture

Not a sell off or market correction.

Going into a bear market lasting many years to unwind decades of leveraged financialization and misallocation. If the DOW and S&P continue to climb from here it will be the Venezuelan kind due to end of tapering, moar QE. But that's gonna drop the Petro-dollar shoe, just a couple of QEs away from being disappeared.

Frazier is going down.


Tue, 02/04/2014 - 10:02 | 4399779 Sufiy
Sufiy's picture

Arthur Cutten: NYSE Margin Debt - Take It to the Limit, One More Time 

Arthur reports on the latest development with the leverage in the system, as we have noted before - the NYSE margin debt tops are preceding the markets tops.Talking Heads on the Bubble Vision are still talking about the minor correction and that underlying economy is strong. We will see very soon how long Taper can go in this environment.

Tue, 02/04/2014 - 10:10 | 4399810 Pumpkin
Pumpkin's picture

I heard some bear hunters say the same damn thing one time.

Tue, 02/04/2014 - 10:27 | 4399882 css1971
css1971's picture

<---- Investors deserve sympathy.

<---- They deserve to lose everything.

Tue, 02/04/2014 - 10:31 | 4399895 Proofreder
Proofreder's picture

Sometimes you get the bear

Sometimes the bear gets you.

What time is today?

Tue, 02/04/2014 - 10:54 | 4399969 Waterfallsparkles
Waterfallsparkles's picture

No one wants to short and get their head ripped off.

Tue, 02/04/2014 - 21:10 | 4402254 MeelionDollerBogus
MeelionDollerBogus's picture

that's because not enough people understand  you can put TEENY tiny amounts of cash in UVXY or HVU and if it doesn't work, you lose really very little,  no margin required, no margin calls possible.
And if the market does smash down you get a 60% rise in days in the blink of an eye. I didn't hit the bottom but 6.41 is where HVU had been; yesterday's high was 11.17 & today it closed at 10.50.
10.50 / 6.41 = 1.638 so 63.8% rise. I was in at 7.87.
Here's the math:
for C ranging from 216-219 , C = hvu 1/11 x spy
& this chart showing C x75
and the scatterplot of HVU vs SPY

Tue, 02/04/2014 - 11:00 | 4399994 Pareto
Pareto's picture

And in a world in which hedge fund leverage is about 500%, by the time exhaustion comes, there will be very few left standing.........says it all.  The available collateral to cover has not changed by 500%, but the leverage has.  End of story.  So, as James Grant reminded us in December, while the FED can change what things look like, they can never change what things are. (I'm going to write this every week....forever.)  A house, is still just a house, no matter how much money you throw at it.  Assets are still just assets with specific exchange values that haven't changed.  All the FED has accomplished is simply a dilution of available collateral. 

Tue, 02/04/2014 - 21:04 | 4402234 MeelionDollerBogus
MeelionDollerBogus's picture

not to worry, we can print moar bears!

... oh, wait...

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