Bank of America's important indicators forecast: The S&P 500 index is expected to rise by 15% in the next 12 months.

According to the latest report from Savita Subramanian, a well-known strategy analyst at Bank of America, a reliable contrarian indicator suggests that the S&P 500 index is expected to achieve double-digit growth in the next 12 months.

The Bank of America's "Sell Side Indicator" is used to track the average stock allocation recommendations of sell-side strategists. Subramanian pointed out that the Wall Street consensus on stock allocation is a reliable contrarian indicator.

The Bank of America's "Sell Side Indicator" remained at 53.5% in August, after rising in June and July, all significantly higher than the level in May. In May, the indicator was at 52.5%, the lowest in at least six years, indicating bearish analyst sentiment.

In June and July of this year, the U.S. stock market experienced a strong rebound. The S&P 500 index rose by 6.5% and 3.3% respectively, while the Nasdaq 100 rose by 6.3% and 3.9% respectively. This performance confirms the aforementioned "contrarian" nature.

Although the "Sell Side Indicator" has risen from its low point this year, it still indicates that analysts are somewhat bearish and overall biased towards a bear market. As a contrarian indicator, this means that the indicator is more likely to send a "buy" signal rather than a "sell" signal.

Subramanian stated that due to the prevailing bearish sentiment among analysts, this pessimism provides a favorable backdrop for the U.S. stock market.

Based on historical data backtested by Bank of America, when the indicator is at its current level or lower, the 12-month return of the S&P 500 index is positive in 95% of cases. Bank of America predicts that the future 12-month return of the U.S. stock market will be at least 15%, with the S&P 500 index expected to reach 4700 points by the end of the year and 5200 points one year later.

On Friday, the S&P 500 index closed slightly higher at around 4515 points. In the just-ended month of August, the S&P 500 index fell by 1.77%, marking the largest monthly decline since February of this year.

Subramanian was once one of the most bearish analysts on Wall Street. In June of this year, she reversed her stance and believed that the bear market in U.S. stocks had officially ended. At that time, she stated that sentiment, positioning, fundamentals, and supply and demand support indicated that investment in stocks, especially cyclical companies, was still a major risk today, but overall, the most likely direction for U.S. stocks remained positive. Historically, after breaking through the bottom and rising by 20%, the S&P 500 index has a 92% probability of continuing to rise in the next 12 months. Based on data since the 1950s, in such cases, the average return of the S&P 500 index is 19%.