Serenity: Bank of America's Bearish View Should Be Viewed with Caution; A Surge in Negative News Often Indicates Institutions Need Liquidity

Odaily reported that Serenity posted on platform X, stating that for those currently citing Bank of America's bearish view, it is important to remember that in March this year, Bank of America claimed that EWY/KOSPI, specifically Korean memory chip stocks related to SK hynix and Samsung, were in an extreme bubble. At that time, Bank of America attributed the rally to retail investors, implying they should sell Korean memory chip stocks, and even compared the situation to the 2008 financial crisis, the internet bubble, and the silver crash. Serenity stated that shortly after retail investors sold their long positions, the memory chip stocks instead rose to new all-time highs.

Serenity noted that institutions are not your friends. Typically, when an unusually large amount of negative news emerges, it is because institutions need liquidity. Previously, BofA Securities stated that investors should remain cautious about US stocks, as a growing number of bear market signals indicate the market is approaching a top. A team of strategists led by Savita Subramanian wrote in a report dated June 5 that approximately 70% of bear market signals have already been triggered, consistent with the average level seen during historical market peaks. The S&P 500 shows statistically significant overvaluation in 17 out of 20 valuation metrics, with 8 of those metrics exceeding levels seen during the tech bubble. Furthermore, high price-to-earnings ratio stocks have significantly outperformed low-valuation stocks, which strategists view as a sign of excessive speculation. Within the technology sector, the gap between the best-performing and worst-performing quintiles has widened to its highest level since February 2000.