The latest survey of sell side strategists on Wall Street indicates a 9% total return over the next twelve months. Chances are it will prove correct.
"So far in this recovery, Wall Street's bullishness on equities has closely mirrored the performance of the market," said David Bianco, head of U.S. equity strategy, Bank of America Merrill Lynch.
"Both equity sentiment and the S&P 500 ended 2009 up significantly from their lows set last spring, but have been essentially flat in the first two months of this year."
Mr. Bianco said this month's sell side indicator score was unchanged at 58.9% and remains in neutral territory.
The current Buy threshold is 51.7% and the Sell threshold is 63.5%. The traditional long-term equity benchmark weighting is 60-65%, suggesting the latest indicator score reflects Wall Street's still cautious optimism.
Based on a survey of Wall Street strategists' recommended asset allocations, the sell side indicator has historically been a reliable contrary indicator.
"In other words, it has historically been a bullish signal when Wall Street was extremely bearish, and vice versa," Mr. Bianco said.