The latest rally in stocks may be almost over, Bank of America warns

That green-and-red contrarian indicator is dictated by the big arrow in the middle that can move between extremely bearish — a buy signal for investors — to extreme bullish, when too much euphoria in markets is telling investors to sell.

BofA’s chief strategist Michael Hartnett credits the shift to improving breadth in the equity market, which means a wider range of stocks have been trending higher, as well as more money flowing into bond and credit markets.

However, since the BofA gauge is often seen as a contrarian indicator, this could mean that the latest bear-market rally might already be close to ending, according to Hartnett.

Thursday saw U.S. stocks log the first back-to-back losses in two weeks after Federal Reserve officials said interest rates would top out higher than expected. Stocks have been steadily climbing off the lows seen from a disappointing September consumer price inflation read in mid-October. Investors were further cheered last week when CPI for October came in softer than expected.

The S&P 500 SPX, +0.48% has been on a choppy ride higher since mid-October when markets got a disappointing consumer price inflation (CPI) number for September.

Read: U.S. stock futures edge higher with Fed rates commentary in the spotlight

The bank’s latest weekly data shows equities have seen the biggest inflows — $22.9 billion — in 35 weeks, and “the chase is on,” said Hartnett.

The latest week (ending Nov. 16), saw $4.2 billion flowing into bonds, $3.7 billion leaving cash and $300 million leaving gold. It was also the 40th consecutive outflow from European stocks, the longest shunning of that region on record.

Last week Citigroup warned clients they had six weeks to squeeze the bear market following that inflation surprise.

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