Original title: bank of America warning: U. S. stocks in the first quarter or pullback 5-10%, this may be the timing of entry source: gold ten data

Bank of America CorporationThe bank has a target price of 3800 points for the S & P 500 in 2021, one of the lowest expectations among Wall Street investment banks, according to a report released by the Research and Investment Committee on Tuesday.

The bank expectsUs stocks will see a 5-10 per cent correction in the first quarter because the market is already overly optimistic.However, the bank believes thatIt will also be an opportunity to enter the market in a bigger bull market.

Warnings about over-optimism in the market are not uncommon. Recently, Goldman Sachs Group, Citigroup, JPMorgan Chase & CoInvestment banks have issued similar warnings. Now, Bank of America Corporation has issued the same warning. Bank of America Corporation's global research proprietary index has reached a record 92 per cent.

This means that the US stock market is in the midst of unprecedented optimism, contributed by the Fed's easing policy, expectations of fiscal stimulus and steady vaccination. But the fundamentals are not as optimistic as the stock market.

It's not just fundamentals that are unstable: Steve Sutmel, chief equity technology strategist at Bank of America Corporation, points out that while the core view is still bullish, some risks have to be watched. for example, the ratio of put to call options and the seasonal pattern of February pose a threat to US stocks.

In addition, Bank of America Corporation added three risks:

First,The cyclical peak of stock market issuance is likely to occur in the first half of 2021.Bank of America Corporation points out that US share issuance has exceeded the record set during the dotcom bubble and that the price-to-earnings ratio of the S & P has fallen after the last two peaks.

Meanwhile, the number of unprofitable IPO has hovered around 80 per cent over the past two years. This means that US investors have not been required to buy so many new, unprofitable companies since 2000.

Second,Small-cap stocks are likely to usher in a big correction.The "incredible rebound" of small-cap stocks in recent months is a strong bull market signal, with small-cap stocks rebounding for 10 years on average. However, as Bank of America Corporation warns, so far, this rebound has not been supported by the company's performance growth.

Finally, the bank warned that a record number of global companies providing guidance had raised their earnings per share forecasts in the past six months, more than in 2004 and 2009. Although real earnings growth may not peak until later this year, the stock market is always forward-looking.

In other words, the share prices of many companies have risen abnormally higher than expected, which means that a small external shock can lead to a series of selling.