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BofA Market Analysis Comment: Wall of worry alive and well
Individual investors’ wall of worry alive and well
The gap between AAII Bullish Sentiment and AAII Bearish Sentiment has reached its narrowest point since the correction low in fall 2023. While several U.S. equity indices demonstrate tactically bullish technical patterns , and many international markets also exhibit favorable setups, individual investors remain hesitant. This persistent skepticism underscores the enduring "wall of worry" in the market.
$6.9 Trillion in Money Market Assets: A Contrarian Signal?
Money market fund assets have hit a record high, with ICI All Money Market Funds Total Net Assets reaching $6.92 trillion last week. This substantial cash reserve raises questions: is it another brick in the "wall of worry"? Despite a 70%+ rally in the S&P 500 (SPX) since late 2022, cash levels remain elevated, driven by higher interest rates that have made cash an attractive asset class. Historically, these persistent highs in money market fund assets have served as a contrarian bullish signal since January 2023.
Cumulative Net Up Volume: A Positive Indicator
Cumulative net up volume, which tracks the advance-decline (A-D) line of up versus down volume within an equity index, has shown a bullish breakout and retest for the SPX. This development could act as a leading indicator for an upside breakout from the December-to-February cup-and-handle pattern identified in last week’s analysis
Top A-D Line Stabilizes After a Challenging Start
The U.S. top 15 most active A-D line faced difficulties in early 2025 but has stabilized since its mid-January low. While this is an encouraging sign, further strength in breadth and volume is needed to confirm a breakout from the SPX’s cup-and-handle pattern.
NASDAQ 100 Shows Bullish Momentum in Breadth and Volume
The NASDAQ 100 (NDX) has achieved new highs in its A-D line and cumulative net up volume, offering positive signals for further gains. These developments bolster the case for an upside breakout from the NDX’s bullish consolidation pattern highlighted in our prior analysis
Global Equity Indices Show Resilient Breadth
International equity markets continue to exhibit strong breadth, supported by bullish technical patterns (see our report: Technical Globetrotting). The weekly global A-D line, which tracks 73 country indices, reached new highs in mid-February, reinforcing the strength of global equity markets.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!