While U.S. stocks are still at near-record high levels, more and more research reports on Wall Street are warning investors to be cautious. Among them, Bank of America (BofA) said the bank’s “Sell Side Indicator” (Sell Side Indicator) has climbed for four consecutive months, quite close to the threshold of the market sell-off!
Bank of America’s “Sell Side Indicator” measures the extent to which Wall Street strategists are bullish on stocks, and when the indicator soars above 60.3%, there is a sell signal. The “sell-side indicator” rose for four consecutive months and now stands at 59.4%, a new 13-year high, although it has not yet released a sell signal, but it is already flashing the alarm. After the “sell indicator” rose to this level, the stock market retreated 7%.
Analysis points to growing investor excitement as a reason for the bank to be more cautious about the outlook, with vaccinations, economic restarts and stimulus measures broadly already reflected in prices. Over the past six months, the broader market has not seen a correction of more than 5%, however, in the past calendar year there will be an average of at least three pullbacks of this magnitude, and pullbacks of more than 10% have not been seen for 14 months, while in the past year there will be at least one such adjustment.
The bank believes that the stock market has not yet touched the sell level and predicts weak stock market returns next, but not to the point of negative returns. subramanian and others predict that the return for the next 12 months will be only 6%, much lower than the 14% predicted at the end of the global financial crisis.
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