CHART OF THE DAY: BofA’s Wall Street Contrarian Indicator Is Close To Flashing Its Biggest ‘Buy’ Signal Since 1985Joe Weisenthal | Sep. 4, 2012, 2:51 PM | 4,143 |
Here’s the latest update of a chart made famous by BofA’s Savita Subramanian.She writes:The Sell Side Indicator, our measure of Wall Street bullishness on stocks, ticked up slightly in August for the first time in six months. However, this month’s improvement of 0.6ppt lifted the indicator to just 44.4, still at the lowest level in the history of our data (since 1985) apart from last month’s low of 43.9. This suggests that sell side strategists’ bearishness on equities remains at 27 year extremes. 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 at 44.4% vs. a traditional long-term average benchmark weighting of 60-65%. The indicator remains firmly in “Buy” territory, a signal that it first flashed in May. Recall that we adjusted our Buy and Sell thresholds in November in an attempt to better incorporate secular shifts in equity sentiment.