BofA Warns of Market Dip—But Says Buy Anyway (Classic Wall Street Logic)

Bank of America just flashed a contrarian buy signal as stocks teeter on the edge of another drop. Because nothing says ’trust us’ like telling clients to catch a falling knife.

Active traders are eyeing the charts while long-term holders shrug—after all, dips get bought until they don’t. The irony? The same analysts predicting doom also need those commission fees.

So grab your risk tolerance and dive in. Or don’t. Either way, someone’s getting a bonus this quarter.

Stocks seem to follow the 2015 – 2018 trajectory

The bank said there are two main reasons that could push stocks higher. First, the market’s path looks a lot like what happened from 2015 to 2018, closely after a presidential election. At that time, stocks gained about 7% before peaking.

Back then, the S&P 500 later fell around 10% in 2018 from its post-election peak. “If this plays out in 2025, the SPX could hit 6,266 this summer. As Newton’s third law says, for every action there is an equal and opposite reaction,” the analysts wrote.

Second, there is an increasing number of winning stocks as compared to losing stocks. Over 50% of S&P 500 stocks now trade above their 200-day simple moving average, a sign that gains are spreading across the market.

So far this month, the S&P 500 is up, wiping out its losses from the start of the year. However, it has slipped over 1.6% today and has been since last Friday, when Moody’s cut its U.S. debt rating and raised fresh worries about the growing budget gap.

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