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 - 09:52 | 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 - 09:32 | 4399689 Temporalist
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 - 09:49 | 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 - 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.

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