Investor bullishness for stocks is improving, but Wall Street’s optimism is still below levels seen in March 2009, when the S&P 500 Index SPX and the Dow Jones Industrial Average DJIA had both cratered more than 50% from previous highs to 667 points and 6,470 points, respectively.
Check out the chart below.
Bullish sentiment for stocks in August reached a 16-month high, according to Bank of America Merrill Lynch’s Sell Side Indicator. The contrarian indicator — which tracks the average weighting strategists are recommending for stocks, signalling a buy when Wall Street is bullish and vice-versa — reached a level of 52.9 in August from July’s 52.3, said Savita Subramanian, B. of. A’s equity and quant strategist, in a note Tuesday.
That level’s just shy of the 53 reading in March 2009 and below the current “buy” threshhold of 54.6, and both fall below the long-term benchmark average stock weighting of 60% to 65%. The indicator hit an all-time low of 43.9 in July 2012, when the Dow industrials were in the neighborhood of 13,000 and the S&P 500 finished the month around 1,380.
“With the S&P 500’s indicated dividend yield above 2%, that implies a 12-month
price return of 17% and a 12-month value of 1,906,” Subramanian noted. “Although this is not our S&P 500 target, this model is an input into our target, which incorporates valuation, sentiment and technicals.”
WHAT IF YOU KNEW WHICH WAY THE MARKET WAS ABOUT TO MOVE BEFORE IT HAPPENED? CLICK HERE To Join Our VIP ELITE GROUP -- FREE!
Powered by 123ContactForm | Report abuse
No comments:
Post a Comment