BofA: One Of The Best Market Indicators Is Predicting Another 30% Return For Stocks

Apr 5 2013 in Investing by Gareth Jones

Bank of America Merrill Lynch‘s contrarian Sell Side indicator, which gauges Wall Street’s sentiment toward stocks, climbed to 47.3 in March.

However, it’s still at a level that reflects extreme bearishness.

Here’s an excerpt from BAML’s report (emphasis ours):

Indicator’s expected 12-month total return is +28%

With the S&P 500’s indicated dividend yield above 2%, that implies a 12-month price return of 26% and a 12-month value of 1975. Although this is not our official S&P 500 target, this model is an input into our target, which incorporates valuation, sentiment and technicals. Historically, when our indicator has been below 50, total returns over the subsequent 12 months have been positive 100% of the time, with median 12-month returns of +30%. Past performance is not an indication of future results.

BAML march sell side indicator