Stocks may have risen from June’s recent lows but market indicators suggest the bottom is not yet in sight. Prices could fall again to new lows following what amounts to a bear market rally rather than a new bull cycle, according to Bank of America.

The S&P 500 was trading at $4,205.81 as of this writing, up about 13 percent since June 17, 2022, and up 45 percent since the 2020 stock market crash when the covid-19 pandemic sent the world into a lockdown.

Bank of America isn’t so sure the recent rally will hold, CNBC reported.

“The S&P 500 has risen 13% from June lows, but we think it’s premature to declare a ‘big low’ in the market and see scope for more downside,” investment and ETF strategist Jared Woodard wrote in a note Tuesday.

Generally, BofA analysts look for 80 percent or more of indicators that usually precede a market bottom to flash before they think a bottom is in sight. So far, only about 30 percent of the indicators have been triggered.

They look at rising unemployment rates, the Federal Reserve starting to cut interest rates, falling profit estimates and the yield on the 2-year Treasury dropping by at least half a percentage point. None of these has happened this market cycle.

Inflation is still too high for the Federal Reserve to back off from raising rates, and higher rates are generally headwinds for stock prices — conditions that may cause a decline in profits, revenue, or growth. 

So far in the third quarter, BofA clients have been net buyers – not sellers – of U.S. equities. U.S. household investors are one of the biggest parts of the equity market, representing $38 trillion in assets, or about 52 percent. The last three market lows occurred one to two quarters after this cohort started to sell, Carmen Reinicke wrote for CNBC.

Investors worry Friday’s unexpectedly strong jobs report will embolden the Fed to continue raising rates — a sign that the “recent bear market rally” will soon come to an end, according to LPL chief global strategist Quincy Krosby in a Forbes report.

“Confusion is driving investor decisions,” said Mark Hackett, chief of investment research at Nationwide. “Investors are increasingly in a game of tug-of-war over bullish and bearish talking points.”

If the market does hit new lows, BofA analyst Woodard suggested to clients, “Use bear market rallies to raise cash and rotate into higher quality assets. Keep dividend and bond coupon reinvestments paused and use tax-loss harvesting techniques ahead of better buying opportunities this year.”