Wall Street’s bearishness may offer another reason to buy, says BofA, as stocks rally

Bank of America’s sell side indicator, which tracks US sell side strategists’ average recommended allocation to stocks, extended its slide in May, down 22 basis points to 52.5%, analysts at Bank of America wrote in a Thursday note.

The indicator has sent a contrarian, bullish signal to the U.S. stock market, according to the note. The sell side indicator has been “a reliable contrary indicator”, meaning that it sends a bullish signal when Wall Street strategists are extremely bearish, and vice versa, the analyst noted. The Bank of America analysts added that they see other reasons to be bullish on stocks in addition to the fact that investors are mostly pessimistic.

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