Corporate and emerging market bonds raked in $13.1 billion, with EM debt showing its second-biggest ever week of inflows. Tech funds also saw a big jump, with their second-best week ever, while high-yield bonds attracted $1.5 billion in fresh cash, the biggest inflows in 48 weeks.
Hartnett reported that BofAML’s “Bull & Bear Indicator” that keeps a watch out for extremes in investor sentiment, is nearing a sell signal.
To be sure, the bull run can continue for an extended period of time even with elevated enthusiasm and the rush of cash, in particular because of the low level of retail investor participation throughout the rally. Low-yielding money market funds still hold $2.84 trillion in cash, a number that has barely budged over the past year.
Also, the big early January run could be the result of seasonal factors.
“The fund flows figures are going to capture the start of the new year, with new 401(k) contributions a big part of it. That tapers off as the year gets older,” said Art Hogan, chief market strategist at B. Riley FBR. “If this was the first or second week of August or September, when seasonality slows down, I’d be be much more concerned.”
Hogan has a 3,000 year-end target for the S&P 500 — about an 8.5 percent gain from Friday’s open — that he feels will be hit even though the market likely will see higher volatility in 2018.
“I think it’s more of a seasonal trend than it is that sort of euphoria or concern that you’re seeing the wrong money coming in at the wrong time,” he added. “I’d wait until the seasonality flattens out before you jump to a conclusion that you’ve got money crashing into the markets at the highs.”
WATCH: BlackRock CEO Larry Fink talks about where the firm is putting money to work.