Click to enlarge
Source: Merrill Lynch/BoA


This is an interesting chart: Improving Wall Street sentiment is still no where near the levels associated with excessive sentiment. Despite the ongoing rally — or perhaps because of it — we are now all the back to the levels enjoyed at the lows in March 2009.

Merrill notes its now up in “ten of the last thirteen months after hitting an all-time low of 43.9 last July, and is now at its highest level since April 2012, when it first flashed a “Buy” signal.

Here is Merrill:

Wall Street’s bearishness is still as bad as it was at the market lows of March 2009. Given the contrarian nature of this indicator, we remain encouraged by Wall Street’s ongoing lack of optimism and the fact that strategists are still recommending that investors significantly underweight equities at 53% vs. a traditional long-term average benchmark weighting of 60-65%. Even though the S&P 500 has risen nearly 20% since sentiment bottomed, history suggests that strong equity returns can last for years after the indicator troughs.

Note that the Sell Side Indicator is based on “average recommended equity allocation of Wall Street strategists as of the last business day of each month.” It has historically been a reliable contrary indicator.


Wall St Optimism Almost Back to March 2009 Levels
Savita Subramanian, Dan Suzuki, Alex Makedon, Jill Carey
Bank of America Merrill Lynch, September 3, 3013

Category: Contrary Indicators, Sentiment, Technical Analysis

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13 Responses to “Sell Side Indicator: Wall St’s Improving Optimism”

  1. [...] Wall Street strategists are getting more bullish.  (Big Picture) [...]

  2. tradeking13 says:

    Do any of these indicators mean anything given the massive Fed intervention?

  3. Backcreek says:

    Another way to look at investor sentiment:

    Interesting contrast in the results.

  4. Lamont says:

    The S&P 500 went from 1074 in early October 2011 to 1709 a few months ago while everyone according to that chart was “super bearish”…lol. Then at 1709 when the sell side was “super triple duper bearish”, that was the time to get in! You really can’t make this stuff up.


    BR: You do not understand this chart. Try reading the legend first.


  5. ukarlewitz says:

    I respect BAML’s work but this indicator seems off. Analysts have never been as bullish as they were in 2000 and that skews the analysis. See chart here.

    I also recall the intermediate period well and can’t believe that analysts are more bearish now than at the 3/09 low, or that they were that bearish at the ‘irrational exuberance’ point earlier.

    Finally, this doesn’t square with BAML’s survey of fund managers with $700bn in AUM who are presently 57% overweight equities. This is the top of the range since the survey began in 2000.

  6. dctodd27 says:

    So, Wall Street research pointing out how lousy Wall Street research is?

  7. [...] Wall Street consensus getting more optimistic – but not over the top yet.  (TBP) [...]

  8. [...] pushback to yesterday’s chart (Sell Side Indicator: Wall St’s Improving Optimism) was rather fierce. Whether that reflects confirmation bias on the part of under-invested readers [...]

  9. Willy2 says:

    Don’t know what to make of it.

    Is Wall Street thinking that rising rates are signaling an economic recovery ? If so, then why are short term rates NOT rising ?