Bank of America: Bull-Bear indicator drops to 7.4, ending sell signal; still cautious in the short term

Bank of America assesses that extreme optimism is fading, but capital flows indicate investors have not underweighted risk assets, with positioning expected to remain defensive for the next three to four weeks. It recommends increasing allocations to small caps, REITs, and consumer discretionary, while staying neutral on tech; maintaining long-term overweight positions in gold, commodities, and emerging markets, and reducing structural underweight positions in bonds and China.