Sell Side Analysts Become The Most Bearish In 15 Years
- Posted by JC Parets
- on July 3rd, 2012
I’ve been out of town for a few days enjoying a little hard-earned vacation. But I’ve been reading a ton of stuff – both current events and some books I recently picked up. I thought I’d share one of the more interesting pieces that I’ve read while I’ve been away.
This is a sentiment report written by Bank of America Merrill Lynch that I read by way of Pragmatic Capitalism. According to Merrill’s ‘Sell Side Consensus Indicator’, less than half of Wall Street’s sell side analysts are bullish. That is more bearish than they’ve been in 15 years, even through the tech bubble bursting and credit mess of 2008:
“After triggering a Buy signal in May, our measure of Wall Street bullishness on stocks declined again, marking the ninth time in eleven months that the indicator has fallen. The 0.8 ppt decline pushed the indicator down to 49.3, the first time below 50 in nearly 15 years, suggesting that sell side strategists are now more bearish on equities than they were at any point during the collapse of the Tech Bubble or the recent Financial Crisis. Given the contrarian nature of this indicator, we are encouraged by Wall Street’s lack of optimism and the fact that strategists are recommending that investors significantly underweight equities vs. a traditional long-term average benchmark weighting of 60-65%.”
Look at the chart:
This is really interesting stuff guys. And I think we can chalk this one up as another positive for equities.
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
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