Sell Side Strategists Most Bearish In 27 Years

It’s like music to my ears.

As a bull, is there a better headline to wake up to?

BofA/Merrill Lynch’s quant group came out with a report this morning that’s been making the rounds. And I can’t help but smile and post it:

“After triggering a Buy signal in May, our measure of Wall Street bullishness on stocks has continued to decline, marking the tenth time in the past year that the indicator has fallen. This month’s 5.5ppt decline pushed the indicator down to 43.9, the lowest level in the history of our data going back to 1985, suggesting that sell side strategists are now more bearish on equities than they were at any point in the last 27 years. 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%.”

We’ll take the contrarian approach here and remember that this group of analysts historically gets it wrong at key inflection points. So chalk this one up as another positive for equities.

 

Sources:

Strategists Most Bearish On Equities Since 1985 (Ritholtz)

BofA: Our Contrarian Indicator is Flashing The Biggest Stock Market Buy Signal We’ve Ever Seen (BusinessInsider)

 


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