It was widely followed stock market A sell signal was triggered after institutionalization Investors They have sharply reduced their cash holdings, according to the latest survey of global fund managers by Bank of America.
The July 2026 survey showed that average cash levels for fund managers fell from 4.1% to 3.6% of assets under management. The survey was conducted between July 2 and 9, and included 181 institutional investors overseeing approximately $484 billion in assets.
Under Bank of America’s monetary rule, any reading at or below 4% triggers a sell signal, indicating that investor optimism may have reached a ceiling that leaves stocks vulnerable to a downturn.
The latest reading is among the lowest recorded this century and represents the weakest monetary situation since early 2026.
Historically, these low cash balances have coincided with high market risk as investors deploy most of their capital in stocks.
Increased bullish positions
Bank of America noted that investor positions have become increasingly bullish. Allocations to US equities rose to a net overweight of 24%, the highest level since December 2024, while exposure to global equities increased to a net overweight of 42% from 38% in the previous month.
The bank’s Bull & Bear Index also reached an extremely bullish reading of 9.4 out of 10, a level historically associated with limited upside and greater risk of market corrections.
According to the survey, investors were encouraged by the improving economic outlook. About 41% of respondents now expect economic growth and inflation to be above trend, the highest percentage since February 2022.
Bank of America highlighted that there have been 16 previous instances since 2002 when a fund manager’s cash levels fell to 3.6% or less.
During those bouts, global stocks fell 1% on average over the next two weeks, then remained down about 0.5% one month later.
On the other hand, the US Treasury Bonds Stocks generally outperformed over the same period as investors moved toward safer assets.
AI stocks remain favorites
The survey found that Semiconductors and artificial intelligence Stocks remain the busiest trade in the market. About 82% of respondents identified long semiconductor positions as the most popular investment topic.
Meanwhile, nearly half of investors surveyed said they are spending aggressively on AI infrastructure by specialty. technology Corporations represent the most likely source of a future credit-related shock.
Despite these concerns, confidence in the AI sector remains strong. Most survey respondents do not expect major AI companies to reduce capital spending this year, while nearly half believe that AI-related stocks are not currently in bubble territory.
