Bank of America Merrill Lynch measures the average equity allocations from Wall Street portfolio managers, and the current reading is at 52.9. That’s considered “neutral” territory and is around the same level as the March 2009 lows that preceded the bull rally.
Historically speaking, a reading at that level would point to a median gain of 22 percent for the S&P 500 with a 94 percent chance of a positive move, according to the bank. However, BofAML forecasts the index will be at 2,450, about a 3.7 percent gain from Friday’s close.
The market’s been in flux lately, with the S&P 500 little changed over the past month as investors have worried that President Donald Trumpwill struggle to get his pro-growth agenda approved this year.
Art Hogan, chief market strategist at Wunderlich Securities, thinks it won’t matter very much. Investors are starting to believe that the economy will grow with or without Trump’s help, he said.
“Around the election last year there was a lot of trepidation about this market, that the market was going to take a pause, and that never happened,” Hogan said. “There’s a growing belief that it’s fundamental versus agenda-driven. What’s driving the market is certainly nothing that the White House has done.”
Watch: Market perception vs. reality