Can US stocks be bought on the dip? Bank of America: Sentiment indicators are far from a "buy" signal
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Glonghui, April 2 — Optimism on Wall Street towards US stocks softened in March, but has not yet reached levels that would trigger a contrarian buy signal. According to a report from Bank of America’s equity and quantitative strategists, the sell-side sentiment indicator shows that as geopolitical tensions drove the S&P 500 index down 5% in a single month, the average recommended equity allocation by Wall Street strategists edged down slightly from 56.0% to 55.7%. Although sentiment is cooling at the margin, the indicator is still closer to a “sell” signal rather than a “buy” signal, and remains quite far from the contrarian buy trigger range. This marks the first reduction in average equity allocation recommendation by strategists in more than six months, but the decrease is merely 30 basis points—about one-fifth of the decline seen after last April’s tariff announcement shock—indicating a relatively mild adjustment in sentiment. The current SSI reading is just 1.9 percentage points away from the “sell” signal threshold, while it is 4.4 percentage points away from the “buy” signal threshold, and remains clearly below the levels—typically above 59%—seen at historical market peaks.
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