Energy Select Sector SPDR (XLE)

[Timothy Smith]

Pros are bailing out of emerging markets, commodities, and energy-related stocks at a record pace, according to the latest BAML fund manager survey. A "late-summer pain trade" leading way to a rally could be at hand, says Michael Hartnett, BAML's chief investment strategist.

"Fears on Greece have been replaced by fears of Chinese recession/EM debt crisis," says Hartnett, noting more than 50% believe China is markets' biggest tail risk at the moment.

The relative positioning of emerging markets (EEM, VWO) to developed markets at -55% is the lowest on record (since April 2001), and allocation to the energy sector (NYSEARCA:XLE) - where a net 30% of managers are underweight - is the lowest since February 2002.

- Timothy Smith