Published July 28th 2022

Daily Brief - Investors capitulation leading to Q3 rally

Whilst we wait for the Fed’s conference, we want to introduce you to our absolute favourite piece of research in the market. Read more below!


According to the Fund Manager Survey by BofA, investors shifted heavily to cash and equity exposure is at historic lows.

This makes equities look more compelling than anytime during 2022. Is this the start of a Q3 rally?

equity allocation

The single best piece of research in the market

If there’s one piece of research to which investors look forward, it is certainly BofA’s Fund Manager Survey.

Running since the times when Merril Lynch was an independent outfit, the Survey tells us about the average positioning of institutional money across different asset classes.

Honestly, it’s a great piece. If you have a buddy at BofA, ask them to send you the FMS. And even if you don’t, the key highlights go out across many media platforms every month - for example see here on

What is the Fund Manager Survey telling us this month?

The FMS is telling us investors are bearish. VERY bearish (chart below). And that their allocations to equities are at the historic lows (first chart above).

To complete the triptych, last week we mentioned that SPX Futures Positioning is at historic lows.

In short, people are underweight equity. Very underweight..

where's lehman

So what do I make of this? Earnings might still fall

Worries about the economy are well warranted. With commentators right and left pointing Powell to Volker’s playbook, the Fed will be thinking seriously about how far to hike.

But stock prices are not determined by fundamentals - rather by the buying and selling of investors who react to fundamentals.

This is why you can have vicious multi-month rallies even during recessions

There comes a moment when those who wanted to sell are done selling. When the only investors left in the markets are buyers, markets go up.


Low positioning in equities might underwrite the right conditions for a Q3 rally.

Idea Spotlight: Exxon Mobile

Price level indicators for Exxon Mobil dropped and historically, this led to a median increase in price of 14.26% over the following 3M. TOGGLE analyzed 19 similar occasions in the past to produce the median projection and this insight received 5 out of 8 stars in our quality assessment.

Investors are eyeing Exxon Mobile as the company prepares to announce its Q2 2022 earnings on Friday - here's what you need to know.

exxon price history

Daily Brief - Investors capitulation leading to Q3 rally

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