BofA: 'SELL-SIGNAL TRIGGERED'

It’s been a historic month for equity fund inflows, and the final week of January was no exception.

This week, total flows into equity funds amounted to $18.8 billion, making it the third-largest week on record.

Click here for a detailed breakdown of this week’s fund flow data >

In a note to clients this morning titled “Sell-Signal Triggered,” BofA Merrill Lynch strategist Michael Hartnett says flow signals are now pointing to a decent-sized sell-off.

According to Hartnett, last time this signal was triggered, in January 2011, an 8 per cent correction in global stocks followed over the course of February and March.

BAML flow rule sell signal

Photo: BofA Merrill Lynch Global Investment Strategy, EPFR Global

Hartnett writes, “On average, a ‘sell’ signal precedes a 5 per cent correction in global stocks over the subsequent 4-5 weeks.”

We’ve seen a lot of similar calls from other strategists in recent days. Citi strategists, for example, sees these flows as seasonal, which indicates to them that a correction is looming. Read Citi’s take here >

DON’T MISS: We Just Witnessed Another History-Making Week For People Investing In Mutual Funds >

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.