TechFlow news, July 20, according to BofA Securities' July 17 fund flow report, the BofA Bull-Bear Indicator rose from 9.4 to 9.6, moving further into the extreme bullish zone; historically, an indicator level above 8.0 serves as a sell signal. Semiconductor ETF inflows year-to-date total $46 billion, accounting for 31% of AUM, while tech fund inflows over the past three weeks hit a record $48 billion. However, the Philadelphia Semiconductor Index has fallen about 20% from its June high, showing a significant divergence between capital flows and prices.
BofA believes the current market has entered a "topping out" zone and suggests reducing equity exposure, retreating or rotating into duration, defensive sectors, high dividends, and the US dollar. The report also points out that extreme investor optimism is built on three fragile assumptions: an economic "no landing," the Federal Reserve will not raise rates, and hyperscalers will not cut AI capex; all three could be broken. BofA provides specific observation anchors: retreat if the Mag 7 Index (MAGS) falls below 65, while a break above 70 is the signal to re-enter.
