MW Markets are getting closer to a buying opportunity as investors capitulate, says Bank of America strategist
By Jules Rimmer
Global markets need to correct another 3% to 5% to indicate a major buying opportunity
For the U.S. voter, investor, politician and consumer, the price of gas is all-important
The market hasn't capitulated, but it's getting closer.
The best signal to add risk will be when 88% of global equity indices are trading below their 50- and 200-day moving average, say strategists at Bank of America led by Michael Hartnett.
Right now, the S&P 500 SPX is there but global markets need to drop another 3% to 5% to trigger the big buying opportunity.
One other indicator that the time is right to buy might be if the cash weightings in investor portfolios rises to 5%. Bank of America's fund manager survey for March showed a rise from a 2026 low of 3.2% to 4.2% so that could easily materialize.
Losses are mount as oil prices surge - the Brent contract is up by two thirds this year due to the war in Iran and attacks on energy infrastructure throughout the region.
Trump...Wall St versus Main St... S&P 500 and Trump economic approval rating
Hartnett assumes the looming midterm elections in November may persuade President Donald Trump to de-escalate as soon as he can and this is the chief motivation behind Bank of America's key calls to sell the dollar index DXY above 100, buy the long bond BX:TMUBMUSD30Y at 5% yield and go long the S&P 500 if it dips below 6600, which it very nearly did on Thursday.
If the war ends without any bounce in Trump's popularity, though, Hartnett warns that there may not be any new summer highs. The chart above illustrates the link between Trump and stocks.
The correction that accelerated this month really started in October, when the Fed was cutting rates with stock markets at their highs. "Big corrections," Hartnett says, "end when sell-off leaders are so oversold they trough."
That's happening now in bitcoin (BTCUSD), software IGV, and the Magnificent Seven MAGS. There's also been a painful capitulation on overbought longs like gold (GC00), precious metals, semiconductors SOXX and emerging markets EEM.
Once markets believe that oil is back below $100 for good, Hartnett and team think it will be much safer for investors to add risk back.
Hartnett identified three key investment themes for the second half of the 2020s. First, the commodity bull market is broadening out from gold to metals and energy, so those nations in control of strategically important chips, rare earths, minerals and oil supplies will have a major advantage.
Second, Bank of America forecasts investors to prefer international and U.S mid-cap stocks as opposed to over-leveraged U.S. large-caps.
Finally Hartnett and team recommend exposure to contrarian consumer stocks that may benefit from populist and socialist policies designed to favor the lower-income electorate.
-Jules Rimmer
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(END) Dow Jones Newswires
March 20, 2026 09:51 ET (13:51 GMT)
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