Bank of America’s Sell Side Indicator (SSI) remained steady at 56.7% in November, matching its highest point since early 2022. This comes despite the S&P 500 reaching a record high with a 5.9% gain for the month. BofA strategists maintained their equity allocation recommendations, reflecting cautious optimism amid uncertain policy signals.

The SSI tracks the average equity allocation recommendations of sell-side strategists for balanced portfolios. While currently in “Neutral” territory, the indicator sits closer to a contrarian “Sell” signal than a “Buy,” being just 1.4 percentage points away from the “Sell” threshold and 5.4 points from the “Buy” level.

Historically, the SSI has functioned as a reliable contrarian signal. High sentiment levels often precede market downturns, while low levels align with bullish conditions. At its current level, BofA analysts estimate an 11% potential price return for the S&P 500 over the next year, contributing to their 2025 year-end target of 6,666 for the index.

Investor sentiment toward bonds has significantly declined this year, with average recommended allocations dropping by 2.9 percentage points. This has bolstered equities, which saw a 2 percentage-point increase in allocations. Underperformance in bonds, driven by reduced foreign demand and rising sovereign risks linked to U.S. debt, further supports the equity market.

“Equity sentiment and valuations are high, but we still favor stocks over bonds for long-term growth,” BofA stated, projecting annual price returns of 5-6% for the equal-weighted S&P 500 over the next decade, excluding dividends. The shift underscores continued confidence in equities as a favorable investment choice despite mixed economic signals.