BofAML contrarian indicator says market poised for 24% gain

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Sentiment on Wall Street has gotten so bad that it's good, at least according to one indicator with a high degree of accuracy.

Investor optimism has continued to erode through the current correcting, with some gauges showing bearishness at multiyear highs.

One in particular — the Bank of America Merrill Lynch Sell Side Indicator — puts sentiment "close to where it was at the market lows of March 2009," the firm's strategists said in a report Monday. That date will be familiar to many investors as it marked the Great Recession low and preceded a 200 percent bull market surge.

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The gauge is a fairly basic measure of how the biggest portfolio managers are positioned. Over the course of the past 15 years, the traditional stock weighting is around 60 percent; currently, that level stands at 52.1 percent, a 0.7 percentage point slide from December and below the 52.9 percent threshold that would trigger a "buy" signal.

Using a little math, the indicator points to a 17 percent price return for the next 12 months, which gets the S&P 500 to the 2,270 range, based on Friday's closing level.