Wall Street had become more optimistic in the final weeks leading up to the Nov. 5 presidential election — a contrarian sign that could suggest limited upside for U.S. stocks, according to BofA Global Research.

BofA’s Sell Side Indicator (SSI), which tracks average stock allocations recommended by Wall Street strategists, reached its highest level in more than two and a half years in October (see chart below). The sentiment gauge rose 50 basis points to 56.7% last month, resuming its rise after a pause in September, said a team of BofA strategists led by Savita Subramanian, head of U.S. equities and the quantitative strategy, in a client note Friday.

But that may not actually be a good thing for stocks. The BofA team has long touted SSI as “a reliable contrarian indicator” because too bullish sentiment can cause some investors to take an opposite view – when everyone else in the stock market is bullish, it’s often a good time to sell.

“Its current level of 56.7% suggests an 11% price return for the S&P 500 over the next 12 months, well below recent history but still roughly in line with the market’s annualized return over the last decade,” BofA strategists wrote. .