BofA WARNS: 2 CRITICAL Indicators Flashing IMMINENT Market CRASH!

Added: 2026-05-24

[00:00:00]Bank of America just issued a warning to all investors. And if you're long the market, then you need to hear this message because what Bank of America just said is this big rally is about to come crumbling down. Now, they say it has everything to do with two key indicators and I'm going to break down exactly what BFA is saying. I'm going to show you how to trade them so you can profit on their call and when they think this is going to happen. Plus, I've got an update on all the machine positioning. I'm going show you how I see this playing out. Now, let's dive into the BFA flow show headed up by none other than lead strategist Michael Hartnett because what he says is one thing President Xi definitely has that Trump wants is low interest rates. And the one of the big risks right now that BFA is flagging is rates. And I'm going to show you how exactly rising rates can take this big rally and cause it to come tumbling down. Because the issue at hand is right now is that meltup is everyone's new base case. Of course, you know, I already think that's happening.

[00:00:58]I made the call way back on April 1st. I said this market's going to rally. I said the odds are pretty high that we're going to see this thing head right up to 8,000. Now, we're not there yet, but all the signs are pointing to that. Yet, Bank of America says, "Hold fast. This things could come unglued because the US consumer price index is on course for greater than 5% by midterms, but few expect Kevin wires to hike in 2026."

[00:01:24]Now, I disagree with that because when I show you this next chart of what the bond market's saying, they're very clearly telling Kevin Walsh, welcome to the job as Fed chief because the first thing you're going to do is be raising rates. And yet, it's no Fed hikes is why investor positioning for stocks and commodities are seeing max bid into November. The real reason is is everybody is playing chase here and they've got good reason to because nobody wants to be left behind. But the problem here, it's all about the rates market. And let me show you why they're predicting that Kevin Waters is going to raise rates. But if he doesn't, it's a massive bullish catalyst. Let's take a look at this first chart. I've got the federal funds rate in blue against two-year Treasury yields in red. And I want you to see it's the market that leads the Fed. You can see here going the com bubble, two-year yields fell.

[00:02:14]The federal funds rate followed with a lack. So, in every instance, the Fed acts like yes, they're making the calls, but really they're watching the market here. Now, let's take a look at what's happening right now with two-year yields. You can see in red, they're shooting higher. And what is telling incoming Feder Kevin Wally is you're likely to raise rates, and that is a huge problem that the market is not ready for at this time. Let's take a look at why. Because according to Hartnett's research, over the past 100 years, once the CPI crosses 4% on average, and keep in mind, we're just under that right now, the S&P 500 drops 4% in the following 3 months, 7% over the next 6 months. So, right now, the risk is high. And let's take a look at this next chart. Let's take that two-year chart and now overlay the consumer price index in blue. And you could see periods like we went into the.com bubble. Inflation was rising and yields were rising. It happened again between 2002 and 2006. Happened right around 2017 into 18 before the Fed cut rates, obviously in 2022. And now it's starting to happen again because what the market is trying to suggest here is that rising inflation is going to lead to rising growth. Now, we know that's not likely to happen, but in the short term, it means rates can go higher. And the reason we know it's not likely to happen because last week we found out one key thing about the labor market and that is average hourly earnings for production and non-supervisory employees just went negative when it's adjusted for inflation. Their spending power it's getting zapped. But let's take a look at that call that the market goes down when that level gets breached. Plus tonight's show is sponsored by Mindblock Holdings.

[00:03:54]You can find them on the NASDAQ and symbol HYFT and they're a bioative AI company seen at the white hot intersection of AI and drug discovery.

[00:04:01]They've already partnered with AMD and 19 of the top 20 global pharma companies. They just signed their first recurring AI platform SAS contract with big pharma. Just posted 52% year-over-year revenue growth and just got initiated with a buy and a $5 price target with a stock currently trading right around a $130. Now, I sure appreciate if you take a moment support our sponsors. All you need to do is click that Yahoo Finance link in the pin comment or description below. Check them out. Stay tuned to the end of the show for more information. And sure enough, it does happen. Let's go back to 1991.

[00:04:33]What happens? The CBI was trending over 4%. That's that horizontal green line on your screen for several years. And finally, the market came down. We also saw it happen going in the.com bubble right before the financial crisis and just barely got to 4% before the crisis hit. We saw it happen in 2022 very clearly. And now Hartner is saying, look, this is the line in the sand. You break 4% and the market is soon to come down after. But wait until you see how the machines are positioned on this.

[00:05:03]This is the big change that nobody can see right now. But let's dive in deeper here because Hartnet notes that the NASDAQ and the 10-year Treasury yields are both annualizing gain in an ominous echo to 2009 and 1999. Of course, we know what happened both instances we had major bare markets. So, you think about what's happening in the market right now. Everybody's getting pulled in and yet wait till you see this next chart.

[00:05:29]Let's now take 10-year Treasury yields.

[00:05:31]We're going to put them in blue. We're going to overlay the NASDAQ 100 in red.

[00:05:35]And what do we see? Very clear signs going to the 91 recession. You can see here yield spiked and the market did correct. You saw the recession in ' 91.

[00:05:44]How about around 2000? It happened. But what about 95? Well, we got a very mild drop in the market if that. How about going into the financial crisis? You could see it happen there. But it didn't happen around 2014. and it barely caused a dent in the market around 2018, but it sure had an impact around 2022. So, is this a tight correlation? Can you clearly look at 10ear treasurials and say this thing's going to come unglued?

[00:06:10]Well, it doesn't give you that clear path. Now, if two-year yields keep rising, it's going to put upward pressure across the curve. And that's the risk here is that the economy can't handle higher interest rates. But when you look at other price action reminiscent of the start of the cycle or the end of the cycle, financial stocks relative to the S&P 500 are now below the March 2000.com bubble lows, the March 2009 GFC lows and the October 20 lows. So what is this suggesting? Are we on the eve of a crash? Or perhaps we are on the eve of a meltup. Now I want to show you this next chart because this is absolutely critical that you see this because this is one indicator you can look at in addition to two-year treasurials and that is bank stocks.

[00:06:55]Remember what I want you to understand is where bank stocks go the market tends to follow. So this could be also a huge trade setup for you as well. Let's take a look because what I've got is the S&P 500. That's in the green and red candlesticks. That's the large ETF spy.

[00:07:11]And overlaid in purple I've got the XLF ETF. That's large banks. So what you can see is when XLF goes up, it pulls the market up, but when XLF goes down, the market tends to follow. So what's the issue right now is you see a market rally against weakening financials. So what's got to happen here is if financials continue to drop, what it's suggesting is that the market's about to follow or if you start to see financials turn higher, well, it means that blowoff top starts to become an opportunity. So if you miss this rally, one thing you could be focused on right now is watching financials. Well, it means you're going to look to play catch-up in a major way. And we can see this relationship as we take a look at this chart provided by Hartnet showing that the XLF versus SPY price relative. And you can see it's touching the GFC's and the CO 19 lows suggesting that there is some absolute upside potential here. And all you've got to do is watch the financials. But what about the bond market? Let's bring this full circle here because what we're seeing here is the 30-year Treasury yields on the verge of a breakout. It's gotten up to roughly right around 5.1% in the last couple times it's gotten there. Well, you've seen yields come down. Now, the risk is that everybody's saying is look, yields are going to get above 5.1 and next thing you know they're going to go six, seven, eight, who knows, maybe even 10% is what the markets panic about. But there's an underlying issue. Everybody is already short the bond market. So the question is who are these sellers? And that's the issue is when we see it hit that 5.1, it reversed, but they're also fixated on 10-year yields. Let's take a look at this chart because right now it's in this triangle pattern. It's starting to break out to the upside. But there's one key thing we do know is that interest rates and bonds typically do not follow technical analysis very well.

[00:09:01]But right now, everybody's fixated on that. But the key point is if you see rates break to the upside, what does it mean for the equity market? Well, it means things are likely to come down.

[00:09:11]Now, let's go back to that chart because I want to look at XLF here because it's also suggesting there could be a potential trade in the bond market. So, let's pull that chart back up and let's overlay.

[00:09:22]This is the intermediate term Treasury ETF. And look at the relationship here.

[00:09:27]You can see that when bond prices go up, that's in the red and green candlesticks. That means interest rates going down. What do you see for financial stocks? They tend to go higher. And so the relationship isn't perfect, but it's relatively close. What this is suggesting is that bond prices continue to drop, financials are going to drop. And if that happens, the stock market's going to follow. So now you've got two trade ideas. If you see interest rates reverse here, you've got financials to the upside and potentially you've got now treasuries to the upside as well. So there's a lot of catalysts here, but these are the two key things you need to be watching right now. That is financials and interest rates. So when does Bank of America say this is all going to come unwound? A lot sooner than you could believe. The stock market, according to Hartnet, is ripe for profit taking in early June due to investors crowding into equities and rising inflation risk. So what they're saying is, look, inflation is indeed going to go higher. But there's a problem. This isn't demandled inflation.

[00:10:25]It's an energy shock. And we know what happens. Yes, do interest rates tend to go higher sometimes. But what happens is demand starts to get evviscerated? Rates come down. That means you could see financial stocks reverse hard here. And that's your setup for the blowoff top.

[00:10:40]So you've got all the setups here. But what else are they watching? Well, Bank of America also notes that a series of key dates next month have the potential to spur caution in equity markets. They say the next OPEC meeting gathering at the start of the World Cup, the G7 summit and the first Federal Reserve FOMC meeting under Kevin Walsh as catalyst. They note that bull capitulation in the stocks and tax is likely to fully complete in the next few weeks early June ripe for taking some risk off the table. But do the machines agree with that? Well, that is the question here because now let's take a look at the other side of this trade.

[00:11:16]Can rates actually come down at a time when everybody expects them to go higher? Well, one thing you can look at is rates volatility, and that's the gap between the S&P 500 and earverse rate volatility, where it's called the move index, and it's widened quite a bit lately. And equities care far more about the speed of rate moves than the absolute level itself. And so, what everyone says based on those charts and the technicals that if we see rates explode to the upside, it's game over for stocks. But what if rates start to reverse? Well, the next thing you know, what you're going to find out is the move index in orange is start to move higher as we see bond volatility drop.

[00:11:54]And what that's going to do is put a tailwind under the S&P 500 because remember, you tend to see these blowoff moves right at the time you get either a rate cut or the expectation of a rate cut. And all at this time, Kevin Washington has to come out and say he's not going to raise rates. Let's talk about machine positioning because right now according to BFA systematic flows are stabilizing in the short to medium-term signals they remain at max long on trend but not on volatility suggesting we could see V control strategies continue to add here while longerterm trends are still recovering from the March draw down and prior mean reverting price action and unwind triggers well they're pretty far below the S&P would have to drop 3% the Russell 5% before that was even an issue but look at this in the bond market.

[00:12:41]Remember, we talk about opportunities when machines are short, and right now they are short at nearly max capacity on two and five-year contracts, but the risk they could be adding to their 10 and 30-year shorts. But how about UBS?

[00:12:55]Well, they note the CTS have been selective on their equity buying with a primary focus on US large cap indices.

[00:13:02]Overall positioning remains close to long-term averages with limited appetite to add. So from a CTA perspective, we're not likely to see a whole lot of buying.

[00:13:11]But from bonds, well, according to UBS, CTAs remain deeply short. Current positioning near the first percentile since 1990. As a result, the bias is asymmetrically toward buying with any decline in yields triggering strong demand. So now you've got the setup here. BFA is saying, look, watch the bond market and if it reverses, the machines are going to have to short cover, giving you a huge opportunity there. But if you like stocks instead, take a look at XLF. But if BFA is right and rates surge up, it's time to close out a lot of those long positions because a shock to the market. We could see over the next few months, it's going to be hard, particularly as we're facing a massive energy shock, one that doesn't look anything close to a 1990s analog.

[00:13:54]But something we are bullish on, Minewalk Holdings, who you can find on the NASDAQ and symbol Hyft. Now get this. Traditional drug discovery costs are over $2 billion and takes more than 10 years. And Big Pharma is desperate to speed that up with AI being the only real answer. And that's why Mindwalk Holdings, the bionative AI company, is built from the ground up for biology.

[00:14:16]And this is massive. AMD, that $300 billion chip giant, just put Mindwalk front and center on their own website.

[00:14:22]Minewalk's Lens AI runs on AMD Instinct Mi300X GPUs. And Minewalk's Lens AI runs on AMD GPUs and CPUs, turning bunchs of work into hours.

[00:14:36]And when AMD brags about you and their marketing, that's validation money can't buy. And Biwok has already partnered with 19 of the top 20 global pharmaceutical companies, basically the entire industry. And they just locked in their first one-year recurring Lens AI platform SAS contract. That's a shift from one-off services to high margin repeatable software revenue. And just look at the numbers. Q3 revenue jumped 52% year-over-year to 4.2 million.

[00:15:02]That's the third straight quarter of growth. And US revenue has doubled.

[00:15:05]Gross margins hit a software-like 59% and they're sitting on 14.2 million in cash. These are biotech numbers with software economics. And it's not just code. They owned a full stack wet lab to prove AI predictions in the real world.

[00:15:18]Their AI just cracked a functional constraint that works across human, aven and swine flu strains, the holy grail for a universal vaccine. And their new B cell llama nanobbody platform is already delivering 10 to 25 times more potent antibodies. That is mind-blowing. And Wall Street is waking up fast. Jones researchers dropped a buy rating at a $5 price target that's nearly four times from current levels. Consensus sits around four. And compare that to recursion, Schrodner, and Absela who are trading at hundreds of millions to billions on the exact same AI drug discovery thesis. Minewalk is the smallest, earliest, and most asymmetric name on the NASDAQ. And the stock is sitting right on a six-month volume profile, which my traders know is a setup we look for right before a monster rally. Now, they just rebranded.

[00:16:05]Now they just rebranded to Mindblock and switched the ticker to HYFT to scream platform company with AMD compute backbone multiple pipeline shots on goal and that services to SAS transition underway. The momentum from mywok is real and again you can find them on the NASDAQ and symbol HYFT. And as always with any company we feature on the show you're under no obligation to purchase their stock. Be sure to research before placing any trades and use your risk control levels when you do. And with that I'm Steve Ammeer. Thanks for watching. Thanks for being fans. Bye now.