Bank of America Merrill Lynch surveyed 230 fund managers responsible for $645 billion in funds in the second week of June and they found a sharp increase in risk aversion.
The survey is the “most bearish survey of investor confidence since the Global Financial Crisis,” they write. “Pessimism driven by concerns over trade war/recession, monetary policy impotence and low strike prices for policy puts.”
The survey showed the second largest drop in equity allocation ever and global growth expectations fell by the most in a single survey since 1994.
On policy, they don’t see a Fed put until the S&P 500 hits 2430 with Trump cutting a deal with China at 2350.
The survey shows a “huge June rotation to bonds, cash, staples, utilities, and huge rotation away from equities, banks, Eurozone, tech” and that long US Treasuries is the most-crowded trade.
So according to the fund managers, they aren’t expecting significant intervention until the the S&P 500 declines almost 20%.
That would be too late for me to react and position myself accordingly. Thus, the critical level that I’m monitoring is the 2700 level.
There also happens to be a weekly demand zone right below that 2700 level. Thus, a break below that zone, I will be shorting the Markets.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
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