Beware! The important indicator of U.S. stocks from Bank of America is just one step away from triggering a "sell" signal

Since the end of 2022, the S&P 500 index has risen by about 60%. Bank of America is tracking Wall Street's views on the U.S. stock market, which is gradually approaching a "contrarian sell" signal.

Bank of America strategist Savita Subramanian and her team noted in a report to clients on Thursday:

Bank of America's "Sell-Side Indicator (SSI)" rose 33 basis points to 57% in December, reaching its highest level since early 2022. The indicator remains in the "neutral" range but is just 1 percentage point away from triggering a "sell" signal.

It is worth noting that the last time the SSI was this close to issuing a "sell" signal was in February 2021, after which U.S. stocks peaked 10 months later. The indicator has not declined for 8 consecutive months, marking the longest streak of increases since 2021.

Subramanian also stated, "While an increasing number of bullish voices raises the risk of market complacency, our data shows that bullish sentiment may remain elevated for quite some time before the end of a bull market."

The SSI is a contrarian indicator that tracks Wall Street sell-side strategists' recommendations on the average allocation of stocks in balanced funds. When Wall Street is extremely bearish, it suggests a bullish outlook for the stock market in the future, and vice versa.

A previous article on the Wall Street Journal website mentioned that according to statistics from "Opening Bell Daily," 16 Wall Street investment banks predict that each bank expects U.S. stocks to continue rising in 2025, with the S&P 500 index projected to increase by 7%-19%. This includes Bank of America, which has a year-end target price of 6,666 points for the S&P 500 index in 2025, indicating about a 13% upside compared to the closing price on December 31.

On January 2, Thursday, the first trading day of 2025 for U.S. stocks, the market was quite volatile. Although the stock index opened high in pre-market trading, there were several instances of declines and rallies throughout the day, indicating intense bullish-bearish battles