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BofA Fears "This Would Exacerbate Any Equity Market Sell-Off"
With over half of all the stocks in the Russell 2000 and Nasdaq already in a bear market, US equity market indices are becoming increasingly driven by a highly concentrated set of stocks that lack any relationship to macro factors. As BofA shows in the charts below, participation in the record-high exuberance in stocks is waning... and waning fast...
S&P 500 and NYSE Breadth is diverging...
The Nasdaq's breadth is plunging...
And the Russell 2000's component participation is a disaster...
But, the biggest concern, as BofA warns, a new low for net free credit at -$182 billion is a major risk should the market drop..
Net free credit is free credit balances in cash and margin accounts net of the debit balance in margin accounts. Net free credit dropped to -$182b and moved to a new low below the prior record of -$178b in February. This measure of cash to meet margin calls remains at an extreme low or negative reading below the February 2000 low of $-129b.
The risk is if the market drops and triggers margin calls, investors do not have cash and would be forced to sell stocks or get cash from other sources to meet the margin calls.
This would exacerbate an equity market sell-off.
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When BoA or Goldman research says to sell, that's usually a good indicator to back the truck up and buy. I think it's insane, but maybe there is another leg to this madness. Or maybe they know Yellen plans to make it rain money down onto the market.
The obvious solution is to NEVER, EVER let the market fall, EVER AGAIN!
It's the only solution. Well that and never allowing rates to rise, ever. Simple (Jack).
Buy the Dip and Sell it. Take today's profits add more preps, metals, food/water/ammo.
how long do cheez-itz last??
Not long at my house, a day or two at the most.
insiders selling in force ... billionaires sitting on hundreds of millions in cash .........
I don't think the heavy stuff is going to come down for quite a while.
Simple, market holiday, freeze prices, freeze transactions, nationalize the stock market, create shared ownership via MyRa, and voila prices are set by your benefactors. Of course you can never access your retirement accounts, but don't mind the tiny little details.
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Jeez, BofA, tell me something I don't already know. Oh wait... you guys never would. At least not publicly, in such fashion as this "article". Gotta love narratives.
Supposedly everyone here knows it's never different this time, but reading the comments proves otherwise.
I guess that because the FED "has to keep the market levitated" that it is in fact different this time. Is that the theory?
If so, it's even worse than the dotcom or real estate supported markets of the past. Relying on the FED, a group of self-serving secret society bankers who would just as soon see us all dead, is about as moronic as it gets.
While all you say is true - you forgot the most important thing they are - in control of the printing presses. As long as the sheeple don't squawk about inflation they can print as much fiat as they want and give it to themselves. They can just make the market go up by making the ruler we measure things by smaller
say what? ... leverage in THESE markets??
next thing you'll be telling me is that we landed a man on the moon ...
Just buy some more camera on a stick, you'll be 'aight.
Take a look at a 1 year SPX chart. The pattern that just completed (and is now rallying off of) is the EXACT SAME pattern that occured from Feb to April. Result? 9.67% increase from that correction. 2150-2200 here we come.
"I'm shocked, shocked to find that gambling is going on here"
/sarc (for those too young to "get it" :)
like the "market" will ever be allowed to drop substantially. puhleeze!
They bought a bunch of put options and they need to crash this bitch to make a profit.
Seems obvious. There is big money to be made if the bottom falls out and you get the heads up just before it happens and either short the market or buy inverse etfs.
dunno about all of this. from looking at the charts with no bias of direction, the waining breath and AD lines could simply be providing price with some cosolidation, yes? no?