[Accurate Prediction of Major Decline by BofA's Hartnett: 'Sell Signal' Has Ended, Key to Investors Returning to Tech Stocks in Mid-November Lies in Semiconductor Prices] BlockBeats News, October 18 — Bank of America Securities strategist Michael Hartnett stated in the latest edition of the Flow Show report that the BofA Bull & Bear Indicator has dropped from 8.1 to 7.4, falling below the 8.0 threshold, thereby ending the sell signal triggered on May 26. However, he emphasized that the end of the sell signal does not equate to the emergence of a buy signal, and tactically, he continues to maintain a defensive stance, refraining from increasing positions in tech stocks for now. Hartnett outlined the prerequisites for returning to risk assets, including the Federal Reserve raising interest rates on October 28 to restore credibility and alleviating concerns over AI financing—neither of which has materialized yet. Meanwhile, market expectations for a Fed rate hike in October have dropped from over 50% to 14%, and the AI credit market has experienced its worst week of the year, with CoreWeave bonds falling into distressed territory and 5-year credit default swap (CDS) spreads implying a default probability of approximately 63%. He pointed out that cooling market sentiment has not been accompanied by sufficient capital outflows. The latest weekly data shows net inflows of $64.4 billion into equity funds and net outflows of $53.1 billion from cash funds. The equity allocation ratio among BofA private clients has reached a record high of 66.4%, while cash allocation has dropped to a historic low of 9.3%. The October fund manager survey indicates that investor overweight positions in tech stocks are at their highest level since August 2020. Regarding future trends, Hartnett views semiconductor prices as a key variable. If chip prices continue to rise, he expects investors to return to tech stocks by mid-November and reverse their "short tech, long bonds" positions as they approach 2027. Conversely, if semiconductor prices decline, he believes this will signal further tightening of AI credit, a peak in capital expenditure growth, and potentially stronger bond performance, with the core driver of asset returns in 2027 shifting from capital appreciation to income. In terms of allocation, Hartnett has chosen to increase exposure to small-cap stocks, REITs, and consumer discretionary assets that benefit from "peak yield," while maintaining a long-term overweight position in gold, commodities, and emerging markets.