BofA: SPY has traded <100M shares for 42 days, the longest streak since 2007 – indicating reduced liquidity into year-end.

Bank of America Warns the Worst Is yet to Come: It’s getting more difficult to freely trade stocks as investing turns into an ‘extreme sport’

  • The US stock market rarely faces hurdles for those looking to freely buy and sell shares, but a Wednesday note from Bank of America details how the S&P 500 index could face a liquidity crisis in the near future.
  • Nearly half of all US stock ownership is passive, and a widening gap between bid and ask prices is stifling potential trades. 
  • Money managers are also shifting funds into long-term vehicles and short-term bets, retreating from the medium-term strategies that drove consistent liquidity in markets.
  • Even active investors are contributing to the problem, crowding into the index’s largest momentum companies at levels similar to “record Tech Bubble levels,” the analysts wrote.