$RUTX, $SPY, $GLD, $BAC
Bank of America MerrillLynch (NYSE:BAC) is saying it may be time to buy risky assets.
The bank’s proprietary Bull & Bear Indicator, which measures investor sentiment by weighing factors like equity and bond fund flows, gave its 1st “buy” signal since Britain voted to leave the EU in Y 2016, strategists wrote in a note dated Thursday.
Top buys for January include US and European high-yield bonds, US small-cap stocks and Chinese and German equities, all of which look “very oversold” after recent market turbulence.
The strategists said the S&P 500 index is likely to bounce to 2650 this month, from about 2524 Friday.
Investment-grade corporate bond funds saw their biggest outflow in the week through 2 January and equity funds have also seen money flow out as investors seek safe-havens like Gold, and US Treasuries.
Recent market volatility doesn’t signal the “Big Low of ’19,” the strategists wrote, though the market could get there if corporate profit expectations slump and the Fed has to cut interest rates.
Bank of America’s wealth management allocated 57.3% of their client portfolios to equities, the lowest amount since February 2016, and are sitting on the most cash since March 2016.
The strategists recommend selling US Treasuries, Japanese Yen and healthcare and utility stocks this month in its risk on strategy.
Have a terrific weekend.