Bank of America* has suggested that bullish investors in the stock market are becoming rare on Wall Street. Instead, there is a growing prevalence of bearish sentiment, with many investors expressing negative attitudes towards the market. Despite this, BofA views the current market sentiment positively and predicts double-digit returns for stocks in the future.
BofA has also noticed a historical pattern where extremely bearish sentiment from Wall Street strategists often precedes a bullish trend in the market, and vice versa. Based on this pattern, BofA believes that the current prevalence of bearish sentiment could indicate an upcoming bullish trend.
"Historically, when the SSI has been as low or lower, 12-month forward S&P 500 returns were positive 94% of the time (vs. 81% overall). Even if we factor in a distribution approach to control for higher returns from 1985 to now, this still yields a year-end forecast of 4,500," BofA's Savita Subramanian said.
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Bank of America is a multinational investment bank and financial services company headquartered in Charlotte, North Carolina. BofA provides a wide range of financial services, including banking, investing, and trading, to individuals, businesses, and institutions around the world.
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