Still no sign of stock market capitulation

Bank of America reports strong inflows into stock investment

Stock markets remain volatile and sentiment is awful, but we have yet to see the kind of capitulation associated with major market bottoms.

The latest Investors’ Intelligence survey of investment newsletter writers shows bearishness is at levels unseen since March 2009′s market bottom, mirroring various investor sentiment surveys which show pessimism at extreme levels. However, multiple strategists have noted in recent months that investor behaviour is calmer than sentiment surveys might suggest.

That continues to be the case, says Bank of America (BofA). Last week, it noted its clients poured $6.1 billion into US stocks over a five-day period — the third-largest inflow since it began recording the data in 2008 and the fifth consecutive week of inflows. 2022 has seen $531 billion of inflows into equity ETFs, says BofA, the second-largest amount on record and one suggesting many investors remain in buy-the-dip mode.

Capitulation is marked by large outflows, not steady inflows. For now, says BofA, expect more volatility and lower prices as a market bottom remains elusive.

Proinsias O'Mahony

Proinsias O'Mahony

Proinsias O’Mahony, a contributor to The Irish Times, writes the weekly Stocktake column