There’s an unnerving level of confidence in a summer rally, according to Bank of America Securities. Bank of America’s latest bull and bear indicator flashed a reading of 9.4, an extremely bullish level that reflects investor optimism that an improving macroeconomic backdrop — strong artificial intelligence spending, a dovish Federal Reserve — is about to unlock the next leg of the bull market. The stock market rally has virtually stalled since early June, as conflicting signals around gas prices, skepticism around future AI profits and the path forward for monetary policy kept investors on the sidelines — awaiting some big catalyst for the next major move up or down. BofA’s Michael Hartnett worries that the sheer level of optimism is in itself a contrarian sell signal, meaning that there may be fewer buyers to devote cash into a crowded market. As a result, he said investors should reduce their equity exposure, especially in high-beta names that are volatile and more sensitive to market movements. Others are more hopeful that the second-quarter earnings season will be the next major catalyst driving further upside for the stock market. According to FactSet data, the S & P 500 is about to see earnings growth above 20% for a second straight quarter, meaning price-to-earnings multiples can continue to decline as earnings accelerate. But pessimists worry that companies are deferring the cost of massive spending, while front-loading the benefits. Paulsen Perspectives’ Jim Paulsen noted that, historically, when stock prices and earnings per share have spiked above trendline averages, the future one-year average performance of the stock market has been disappointing. There’s also the worry that higher inflation could eventually hurt earnings expectations, in the event that hostilities between the U.S and Iran continue to worsen. But on Tuesday, at least, the major averages were last higher, after the latest consumer prices data for June showed pricing pressures were softer than feared.