The stock indicator is close to giving a ‘Buy’ signal

Bank of America Corp’s so-called sell side indicator — a measure of Wall Street sentiment on the stock — is at its lowest level since 2017. Such levels typically trigger rallies, with 12-month returns for the benchmark S&P 500 index. Positive 94% of the time, strategists including Savita Subramaniam wrote in a note dated November 1. The average profit in such scenarios is 22%.

“Wall Street’s consensus equity allocation has been a credible contrarian indicator over time,” the strategists said.

He wrote that the equity-sentiment measure is one of the inputs that have led BofA to set its S&P 500 target at 3,600 for this year and indicate that the equity gauge could rise to 4,500 in the next 12 months. Is. The stock benchmark had closed at 3,856.10 on Tuesday.

Expectations of a sluggish turn in the Fed’s policy have strengthened ahead of a rate decision scheduled later today. Optimism has helped the S&P 500 index rebound more than 10% from mid-October lows, when it fell to November 2020 levels.

Meanwhile, the average recommended stock allocation among Wall Street analysts has declined by more than 6 percent this year, and the proposed ratio for bonds has increased by about 5 percentage points, BofA’s Subramaniam and team said.