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Home Stock Analysis BofA’s index suggests the S&P 500 will rise 13% over the next 12 months. From Investing.com

BofA’s index suggests the S&P 500 will rise 13% over the next 12 months. From Investing.com

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Despite strategists’ hesitancy to increase equity allocations in June, analysts at Bank of America remain optimistic about the stock market.

The bank’s contrarian sentiment gauge, the Sell-Side Indicator (SSI), held at a two-year high of 55.3%, signaling that while strategists are cautious about the sustainability of the stock rally, they are not pulling away from stocks.

The BofA report highlights the index’s past performance as a contrarian signal: Currently in “neutral” territory, and although less predictive than its extreme values, the SSI is still showing healthy returns.

Based on this neutral reading, BofA projects a 13% upside over the next 12 months (NTM).Historically, when the SSI is at or below similar levels, the S&P 500 has outperformed the NTM 94% of the time.

Looking ahead to the first half of 2024, the strong performance of the S&P 500 is reflected in strategists’ increased equity allocations, but Bank of America sees more potential in certain sectors going forward.

While they acknowledge there is a “constructive backdrop” for the stock market, they believe opportunities lie in cyclical sectors rather than the broader market.

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