I have shown this graphic repeatedly in the past, but given today’s rally, we might as well trot it out one more time:

The Sell Side Indicator — Merrill’s measure of Wall Street’s bullishness on stocks — rose by 2.8pt in January to 49.8. This is now an eight month high and the fifth time in six months that the indicator has improved after hitting all-time lows in July at 43.9.

The S&P 500 has risen 10% in the six months since sentiment bottomed. Historical returns are typically up 24% and 46% in the 12 and 24 months that follow such as bottom. following.

 

 

Source:
Bank of America/ Merrill Lynch
Sell Side Indicator, February 1, 2013

Category: Analysts, Contrary Indicators, Investing, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

16 Responses to “Wall St. Feeling Better but Far from Bullish”

  1. Pantmaker says:

    Awesome baby…YEAH…’ Merica!!!!

  2. mad97123 says:

    Interesting how the bullish % just kept increasing all through the 2000 crash. And the biggest drop occurs with the biggest rally. Let’s hope the next leg up in bullishness occurs during the next crash.

  3. Angryman1 says:

    Not much of a surprise. Improving economic fundamentals and the FED helping reduce leverage will spur liquidity through financial markets.

    My cousin just finished up his debt issues from mid-00′s surge after the bank was able to reduce his principle and it was a great relief. Now they have a plan for him to pay the rest off in the coming months.

  4. clay says:

    This chart more than anything helps me keep the bear suit in the closet. Please keep posting it. Thanks.

  5. queball says:

    Interesting chart…Can someone please explain to me what the raw data is to calculate this? Or is mother Merrill making stuff up again.

  6. BenGraham says:

    That straight line drop in ’12 seems without precedent. Makes me wonder if there isn’t a glitch or change in the data calc. Analysts don’t seem that bearish to me.

  7. b_thunder says:

    This indicator shows what the Wall St. salespeople (aka “strategists”) say, not what the the Wall St firms actually do. Sorry, but I follow the **Follow the Money** rule, not the Wall St propaganda.
    If the sell side was so-not-bullish, why are almost all the funds positioned at record net-long?
    Why is margin debt is at multi-year highs?
    If “the indicator [was] hitting all-time lows in July” why was VIX setting one multi-year low after another?

  8. TLH says:

    Is not margin debt high and short interest low?

  9. boveri says:

    This is either a wonderful contrary indicator or one of the dumbest ever conceived.

  10. BuffaloBob says:

    Happy days are here again!

    Anecdotal, but there are so many bullish folks everywhere; John Q. Public going whole hog into equities, newsletters very positive, usually bearish internet commentators bullishly giddy. Negative GDP explained away with a giggle.

    What could possibly go wrong?

  11. danm says:

    http://www.cetfa.ca/infocentre/stats.html

    Those are the stats for Canadian ETFs. They clearly show that Mom and Pop are bullish.

    But I’m not even sure it’s true bullishness… my guess is that it is desperation… their thirst for income is insatiable and they just need those divvies….

  12. danm says:

    The End of Fear

    http://www.theglobeandmail.com/globe-investor/the-end-of-fear-why-that-hoard-of-cash-is-streaming-into-stocks/article8142845/

    We are in the Hockey Stick part of the curve. Mom and Pop are playing. Wall Street is on another planet.

  13. wrongtrade says:

    there is no way that stock bearishness now is higher than it was in late 2008 and early 2009. No way.

  14. dancingdiva says:

    Any ideas what is in this indicator? I find it extremely odd we’re at the highest level in years but still well below the average in bullish sentiment. If one believes the indicator, this bodes very well for stocks unless we are in the midst of a seeing a new range develope for the the indicator.

  15. Disinfectant says:

    Are you serious for posting this again? You just did this a few weeks ago and I told you it was bogus. Here’s the link http://rp-pix.com/mq