Bank of America’s Sell Side Indicator (SSI), a contrarian sentiment gauge tracking sell-side strategists' average recommended equity allocation, increased to 53.6% last month, rising by 56 basis points.
This uptick follows the S&P 500 's nearly 9% rally in its best month since July 2022, according to the bank’s quant strategists.
Despite the increase, the SSI is only 1.1 percentage points above its May trough, the lowest level in over six years. Historically, when the SSI has been at this level or lower, 12-month forward S&P 500 returns were positive 96% of the time, with a median return of 21%.
The current SSI level indicates an expected price return of +15% over the next 12 months, which would see the S&P 500 reach 5300 by the end of 2024. While the SSI is currently in "Neutral" territory, it leans much closer to a contrarian "Buy" signal than a "Sell."
“Despite growing expectations for a soft landing, we are still far from a market environment dominated by high conviction and euphoria,” the analysts wrote.
“But sentiment isn’t the only reason to have a constructive equity outlook, in our view: we are likely past the point of peak uncertainty on inflation/rates, corporates already had an earnings recession and have cut costs, BofA fundamental analysts expect margins to hold up amid decelerating prices, and the US has key advantages over other regions.”
Bank of America’s official price target for the 2024-end is 5000.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.