The S&P 500 has delivered double-digit gains in 2026, and the rally has outlasted every warning thrown at it so far. One of Wall Street's most closely tracked positioning gauges is now flashing a different signal.
Bank of America's proprietary Bull & Bear Indicator has remained in sell-signal territory since May 2026, with July weekly readings ranging from 9.5 to 9.6 on a 10-point scale, Business Insider showed.
Those are the highest levels seen since 2021, driven by extreme positioning across hedge funds, fund managers, equity flows, and credit-market technicals.
"Extreme bull positioning says reduce risk exposure," Bank of America chief investment strategist Michael Hartnett said in a client note, Business Insider reported.
The signal does not guarantee a decline, and prior sell triggers have sometimes fizzled without producing meaningful losses. But the buyer pool has thinned enough that even modest earnings or policy disappointment can spark outsized selling pressure.
The indicator blends institutional positioning, equity and bond flows, global stock-index breadth, and credit-market technicals into one composite score. When that score crosses above 8.0, the firm treats it as a contrarian sell signal for risk assets.
Fund-manager positioning reached the 99th percentile, equity flows hit the 93rd percentile, and hedge-fund exposure registered at the 83rd percentile in Bank of America's component breakdown reported by Guru Focus.
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Credit-market technicals also came in elevated at the 77th percentile, reflecting tight high-yield spreads and thin risk premiums across global bond markets.
A second threshold fired alongside the indicator, with managers cutting cash reserves to 3.5% of total assets under management in the August Global Fund Manager Survey, down from 3.6% in July and the sixth-lowest reading in the survey's history since 1998.
That breaches Bank of America's 4.0% Cash Rule, a sell indicator that confirms institutions are fully deployed, with almost no dry powder remaining.
The indicator has fired 17 sell signals since its launch 24 years ago, giving investors a meaningful sample of post-signal outcomes to evaluate.
Global stocks, as measured by the MSCI All Country World Index, averaged declines of 2% to 3% in the two to three months following each signal, Hartnett noted.
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