BofA Sees “The First Step Toward Market Euphoria” As Wall Street Bullishness Hits 20 Month High

While one can hardly accuse the market of being particularly nervous at this moment, with the VIX dropping to single digits earlier today for the first time in a decade, and with strategists and pundits explaining to anyone who will listen how this is the “most hated rally ever” despite the S&P trading at all time highs at valuations that are in the 99 historical percentile, an interesting admission was made today by Bank of America which reported that in April, its Sell Side Indicator, a proprietary measure of Wall Street’s bullishness on stocks, rose by 0.6ppt to 53.5, its highest level since August 2015 (recall August 2015 is when the infamous ETFlash Crash took place, sending the Dow Jones brief lower by 1,000 points).
BofA’s Savita Subramanian also explains that the indicator moved further into ‘Neutral’ territory, where it has been for the past five months. What is curious is that while sentiment has improved significantly off of the 2012 bottom – when this indicator reached an all-time low of 43.9 – today’s sentiment levels are barely above where they were at the market lows of March 2009.
And yet, while modest the transition is notable, at least to the BofA strategist, who writes that “the recent inflection from skepticism to optimism could be the first step toward the market euphoria that we typically see at the end of bull markets and that has been glaringly absent so far in the cycle.”

This post was published at Zero Hedge on May 1, 2017.