BofA's Sell Side Indicator Signals About 12% S&P 500 Price Gain Over Next Year

Bank of America's Sell Side Indicator (SSI) remained essentially unchanged in January, edging up 10 basis points to 56.0%, a level the bank says implies roughly a 12 percent S&P 500 price return over the next 12 months. The gauge, described by the bank as a contrarian sentiment signal, sits at its most bullish reading since March 2025, though it remains 1 percentage point below January 2025's peak allocation. BofA notes allocations reflect confidence in earnings resilience, with no observed cuts to 2026 S&P 500 EPS and corporate transcripts showing record-high sentiment.

Key Points

BofA's Sell Side Indicator rose 10 basis points in January to 56.0%, implying a 12% S&P 500 price return over the next 12 months.
The SSI is described as a contrarian signal and is at its most bullish level since March 2025, though it is 1 percentage point below the January 2025 peak of 57%.
Corporate results and guidance are supporting strategist allocations: no cuts to 2026 S&P 500 EPS have been observed and consensus expects 14% EPS growth, while transcript sentiment is at a record high and above-consensus guides outnumber below-consensus guides by 1.2x.

Bank of America reports that its Sell Side Indicator (SSI) continues to suggest meaningful upside for equities, with the measure implying a 12 percent price return for the S&P 500 over the coming 12 months.

According to BofA strategist Victoria Roloff, the SSI was largely stable in January, rising 10 basis points to 56.0%. The bank characterizes the SSI as a contrarian sentiment indicator - typically most bullish when Wall Street strategists are most bearish, and vice versa - and notes the current reading remains the most bullish since March 2025.

Roloff also observed that the indicator is 1 percentage point below its January 2025 peak allocation of 57 percent. While sentiment is elevated, BofA cautions that there is no clear bearish threshold in view. The SSI sits closer to what the bank defines as a 'Sell' signal than a 'Buy' signal - a margin of 1.7 percentage points versus 4.7 percentage points - yet it remains beneath the levels commonly exceeding 59 percent that have been associated with prior market peaks.

The S&P 500 rose 1.5 percent in January, a rebound following an intra-month pullback of 2.6 percent that the bank links to geopolitical tensions. BofA interprets strategists' steady allocations as evidence of confidence in earnings resilience across the index.

With roughly half of S&P 500 companies having reported earnings so far, Roloff said the bank has not observed cuts to 2026 S&P 500 earnings per share projections, while consensus estimates continue to expect 14 percent growth for 2026 EPS. Corporate sentiment, measured through transcript analysis, is tracking at record highs and mentions of 'weak demand' are on the decline.

Guidance trends are also holding up, with companies issuing 1.2 times more above-consensus than below-consensus EPS guides in January. Taken together, the SSI reading, steadier strategist allocations, and positive corporate commentary underpin BofA's view of solid forward returns for the S&P 500.

Note: The article reflects the data and observations presented by Bank of America and attributed to strategist Victoria Roloff.

Risks

The SSI, despite its bullish implication, remains below levels typically observed at market peaks (commonly >59%), leaving room for shifts in strategist allocations that could alter the outlook - this could impact equity markets broadly.
The S&P 500's January rebound followed a 2.6% intra-month pullback attributed to geopolitical tensions, indicating that external geopolitical events remain a source of near-term volatility for equity indices.
Although no cuts to 2026 S&P 500 EPS have been observed so far, the current assessment is based on approximately half of the index's earnings having been reported; further reports could change the earnings trajectory and influence markets.

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