BofAML Warns Stock Bulls: "Don't Believe The Hype"

Tyler Durden's picture

"Stay defensive," warns BofAML's Macneil Curry. While risk assets ended last week on a very strong note, with the S&P500 putting in its best 2 day performance since October; the weight of evidence says that new S&P500 lows are coming and that risk assets should suffer in the weeks ahead. From the S&P500’s impulsive decline from 1850, to negative February seasonals, to deteriorating equity market breadth (the percent of NYSE stocks trading above their 200d avg is at its lowest since Oct'12); it should pay to remain defensive. In the week ahead we look for a top into the 1800/1823 area before the downtrend resumes for 1711/1686; and stay bullish bonds.

Via BofAML's Macneil Curry,

SP500 price action says the trend is down

Despite the impressive Thursday/Friday rally, the weight of evidence says the trend has turned lower. In addition to deteriorating breadth and negative seasonals, the decline from 1850 to 1737 was impulsive (unfolding in a non-overlapping five wave manner) which means the trend has turned lower. In the week ahead we look for a top into the 1800/1823 area before the downtrend resumes for 1711/1686.

February is bad for risk, especially after a down January

February is a month when the S&P500 tends to take a breather. Since 1950 it has averaged a return of -10bps and risen 55% of the time. HOWEVER, after a negative January the month of February turns much nastier. In such instances, it averages a decline of -1.4% and with the odds of a decline rising to 63%. BEWARE.

Stay bullish Treasuries. 5s target 1.245%/1.224%

With risk assets set to suffer further, stay bullish Treasuries. Focusing on the belly of the curve, 5yr yields remain on track to test their medium term range lows and long term pivot zone of 1.224%/1.245% before greater signs of basing emerge.

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ebworthen's picture

100-1 we don't see Macneil Curry present this on CNBC tomorrow, or ever.

X_mloclaM's picture

he's short term, though you're right he also recently admitted a bit back of a medium-term possibility of a breach of 1.22 back towards .8, but neglects to say it could get that bad now, in this note... so Id stay away from those particular odds

stocktivity's picture

These charts and fundamentals don't mean shit anymore. As long as the fed keeps printing, It's all Bullshit!!!!

Headbanger's picture

Oh duh.  Does the word "taper" mean anything to you?

Or how about record equity fund out flows?

But keep being so desperate for the Fed to keep pumping which they won't.




The rally of the past few days seen in the top chart is a second wave which has reached the 50% retrace level typical of second waves.

It has also hit the back of the major channel lower trand line it broke below last Monday.

So expect an extremely sharp sell off this week that may well break below the 200dma!

fijisailor's picture

LOL.  Stay bullish treasuries.  Yeah right.  Have faith in a bankrupt government.

disabledvet's picture

I "agree" with you in the sense that going AND STAYING "long treasuries" is absolutely not a "defensive play." (incredibly the dollar has soared here btw.)

In other words in equity parlance "defensive" means fearing inflation and buying big into drug companies, hospital chains, medical devices manufacturers, food companies, etc.

This view here is a VERY radical effect equating "share price" with cash money itself and treasuries as a kind of "bail in trade" to "mitigate risk." CRAZY!

In other words you are "double long" here...both say Amazon and Tesla (no earnings!)...and the Federal Government and a "war trade." (no inflation!)

Interestingly "on the one hand QE drove interest rates to the lowest ever in recorded history" but on the other hand "Taper might have the impact of breaking that record con gusto."

In short while deficits absolutely effect "bankruptcy" doesn't.
The only thing left to do is to "lassoo the moon." (and yes we have Top Men working on that to) "stabilize gravity a little" so we can get into outer space more easily. "Spread our Space Wings" so to speak.

fijisailor's picture

Poor sheep.  They have nowhere to go.

SAT 800's picture

Silver is above $20; the sheep have always had someplace to go.

Boston's picture

Santelli said it clearly last Friday morning---if the S&P drops 10% or so, then Treasury prices would soar (ie. yields would plunge). 

This is a short-term trade. It says nothing about long-term government solvency.

Curry has been totally right for the last two months. You're clearly clueless.

Tasty Sandwich's picture

I hear rotor blades in the distance.

buzzsaw99's picture

our advice: buy lots of bonds, FROM US!

Josh Randall's picture

So I should just stay here then?

qqqqtrader's picture

I suggest flip a coin,

50/50 odds are probably just as good as the above article guesstimate.

knukles's picture

Or alternatively, 36% of the time something else happens, which could mean a retreat to past bases built long ago that few remember but had then provided substantial overhead resistance and a floor following the inverted cup and saucer formation form the preceding period.  Thus, retrasements could prevail until alternative scenarios have unfolded demanding a recapitulation and reassessment of prior forecasts unlike previous series which were held by strong hands until they became weak at the inflectional points just about the confluence of past present and reestablishing the future moving average singularity.  Likewise with a upcoming double option followed by the triple witching exposure in spite of the draw-downs in inventories, we feel safe in suggesting that with the significant amounts of cash upon the sidelines, hopefully Elanor Titsalot will become fully exposed on an unseasonably adjusted basis.

frankthomaswhite59's picture

how do I buy a subscription for your newsletter?

disabledvet's picture

oh, no. you definitely want to give this "advice" away for free.

basically we're "Star Treking" here.

And's the soundtrack while we "rocket higher":

risk-reward's picture

Ain't it the truth......nicely done, Knucks.

qqqqtrader's picture

but, but, what about the weather factor, all the vortex's and stuff and junk... now was that calculated?

Emergency Ward's picture

That's accounted for in the highly complex double-breasted breakout algorithms.

fijisailor's picture

The charts are clearly showing where we're going.

Goldilocks's picture

Classic "Caddy Shack" doodie in pool- Hilarious! (1:44)

orangegeek's picture

S&P500 Daily did close below its bull channel - one that started in July 2013.


But it the last two trading days, it has moved back in - this time around, it may not hold.

BullyBearish's picture

What does real estate's staying surprisingly strong

TheRideNeverEnds's picture

BoA just wants you to sell stocks so that they can buy them on the cheap as clearly we are poised for a breakout to new highs and will likely close out 2014 over 2200 if not 2500. 


I am on to your game and you aint gettin my FB stock, I'll sell some when it hits 100 this spring if you are still interested.    

jcaz's picture

Funnies shit I've read on here in days-  your sarcasm is brilliant....

What?  You really mean it?


Colonel Klink's picture

Bankruptcy of America Muppet Looting?  Enough said.  Bofaml stock price, don't believe the hype!

OldPhart's picture

BofA opened it's mouth...shit came out.

I'm inclined to ignore.

Sufiy's picture

Never believe any hype:

Bubble Chronicles: Bitcoin Crashing Down Fast to 530 at Mt. Gox

  After all the news about the Mt. Gox and Russia making any transactions with Bitcoin illegal, Bitcoin is crashing fast now with Mt. Gox  quoting below any other exchanges at 530 and Litecoin is down to 15.


"MtGox have discovered a critical flaw with Bitcoin, that every exchange is now having to deal with. That fault threatens the functioning of the digital currency."



SAT 800's picture

Gosh, what a surprise. Pimply faced computer hackers invent perfect and untouchable new money; fault is found. Who would'a thunk it. They have so much experience in real life; how could they be wrong?  Computer freaks live in a "special" world; which looks a lot like a video game; and they didn't have time to study any of the rules the real world runs on; too busy studying code writing.