The S&P 500 is close to market peak based on how many 'bear market signposts' it's hitting, BofA says: a whopping 60% | Fortune

"Bank of America Research has issued a fresh warning for equity investors: the S&P 500, now hovering near historic highs, is demonstrating elevated risk levels with 60% of the firm's proprietary "bear market signposts" flashing red-just shy of the point that has historically heralded a market peak. The bank's S&P 500 Relative Value Cheat Sheet, published Monday, reflected growing caution among the team led by Head of U.S. Equity Strategy Savita Subramanian."

"Subramanian's team argued that investors should be increasingly selective, as the broad index has become "statistically expensive on everything." All 20 of the valuation metrics tracked by her team are at expensive levels, and in fact have never been more expensive in several key areas, including market cap to GDP. The S&P 500 is also trading above its Tech Bubble levels on nine different metrics, Subramanian's team noted."

"BofA's methodology tracks 10 signals that tend to precede cyclical market tops. Currently, six out of these ten are triggered, including elevated price-to-earnings ratios, extreme outperformance of high-multiple stocks compared to cheaper ones, and loosening credit conditions. Historically, major market peaks have occurred when roughly 70% of these indicators were triggered, making today's 60% worryingly close. According to BofA's strategists, these "bear market signposts - the triggers that typically precede an S&P 500 peak - suggest additional caution.""

Bank of America Research flags elevated market risk as 60% of its proprietary bear market signposts are triggered, near the historical ~70% level that has accompanied S&P 500 peaks. All 20 valuation metrics tracked by the team sit at expensive levels, with several records breached including market cap-to-GDP and nine metrics trading above Tech Bubble levels. BofA's methodology monitors 10 cyclical-top signals, and the active triggers include high price-to-earnings ratios, extreme outperformance by high-multiple stocks, and loosening credit. Morgan Stanley Wealth Management CIO Lisa Shalett warned of concentration risk from AI, which has driven 75% of gains, 80% of profits and 90% of capex.

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