By Jules Rimmer
Hartnett says investors should avoid so-called 'bro billionaire' stocks
Hartnett expects key levels in major asset prices to hold and overall, rebards the current correction as overdue and healthy.
Every week, the first item in Michael Hartnett's Flow Show report has a proprietary dashboard for trading sentiment on a scale from zero to ten: the Bull &amp; Bear indicator. It swings from extreme bearish on the left, suggesting buy, to extreme bullish on the right triggering a sell. The reading on the speedometer this week is 9.6, the highest since March 2006.
This week's reading of 9.6 on the Bull &amp; Bear indicator is the highest since March 2006
Bank of America's Bull &amp; Bear Indicator is designed to quantify investors' fear and greed using data on institutional and hedge fund positioning, equity and bond flows, global stock index breadth and credit market technicals.
For Bank of America's chief equity strategist, this proprietary signal smacks of &#34;peak positioning, peak liquidity, peak inequality.&#34;
That indicator had already flashed a &#34;sell&#34; signal on Dec. 17.
Hartnett's note, published every Friday, recommends staying short the cohort of stocks he labels &#34;the bro billionaire plays&#34; - stocks like Tesla (TSLA), Palantir (PLTR) and Nvidia (NVDA) - but staying long &#34;Main Street&#34; themes like small cap stocks RUT, real estate investment trusts VNQ and banks KBWB.
Hartnett intends to maintain this approach until such a point as President Trump's approval rating improves, were he able to successfully pivot policy to address affordability.
Bro billionaire stocks have underperformed small and mid-cap stocks in the last few months
For Hartnett and his team of fellow analysts Myung-Jee Jung, Anya Shelekhin and Elyas Galou, while speculative froth is being unwound in the market, the major support levels of $58,000 on bitcoin, $133 on the State Street Technology Select Sector SPDR ETF XLK and $4,550 on gold (GC00) should hold. He does say there may be one more destabilizing flush of extreme positioning in Asia tech stocks that have been exhibiting bubbly characteristics of late.
Hartnett highlights that $2 trillion of cryptocurrency market capitalization has been eroded since the correction began and that equates to 10% of the spending by American consumers. Wall Street, he observes, is &#34;sensibly rotating from AI spenders to beneficiaries, services to manufacturing, U.S. exceptionalism to global rebalancing.&#34;
Another theme that Hartnett has emphasized time and again over the past twelve months is to stay long international exposure. He cites the examples of multiple major geopolitical events that have heralded a momentous shift in asset market leadership from the end of Bretton Woods system in 1971, to the global financial crisis of 2008-2009 and the pandemic of 2020.
The winners of the current changing order and the best calls for 2026, therefore, are international stocks, Chinese consumer plays and emerging markets commodity producers.
Emerging stocks EEM have gained 7% this year and ex-U.S. ACWX more broadly is up 5%.
-Jules Rimmer
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(END) Dow Jones Newswires
02-06-26 0727ET

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Bank of America's Bull & Bear indicator has reached a two-decade high of 9.6, signaling potential stock market peak conditions. Chief strategist Michael Hartnett advises investors to avoid 'bro billionaire' stocks like Tesla and Nvidia, favoring small-cap stocks and real estate. He notes significant corrections in the cryptocurrency market and emphasizes the importance of international exposure in investment strategies. Hartnett expects key asset price levels to hold despite current market corrections, indicating a shift in asset market leadership towards international stocks and emerging markets.

- Michael Hartnett advises investors to avoid 'bro billionaire' stocks like Tesla and Nvidia while favoring small-cap stocks, REITs, and banks.  
- His Bull & Bear indicator reading of 9.6, the highest since 2006, suggests a peak in investor positioning and liquidity, alongside a $2 trillion decline in cryptocurrency market cap.  
- Hartnett expects major asset price support levels to hold, highlighting a shift towards international exposure and emerging markets amid ongoing market corrections.

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Two-decade high for Bank of America's 'bull and bear' indicator points to stock-market peak, strategist says