Bank of America-Merrill Lynch is warning investors not to chase the rally.
Even though it's predicting the end is near, the firm isn't advocating a strategy which would push money to the sidelines.
"The market is trading quite elevated," said Marc Pouey, BofA Merrill Lynch's senior U.S. equity strategist, told. "But I think underneath the surface there are quite a few opportunities out there."
According to Pouey, there are two sectors which will likely be immune to a broader market downturn.
"Two of the glaring areas for me are financials and in health care which are both trading at a discount to the market here," he said.
Pouey sees financials as a growth story.
"We've seen over 10 percent dividend growth in the space. They're also buying back their stock very, very aggressively," added Pouey. "They're rewarding shareholders from that perspective."
He made the case for health care based on the sector's history.
"If you look back over the last three years or so, consistently — every single quarter — health care delivers top-line and bottom-line beats outside maybe a couple of quarters. They are really delivering the goods there," said Pouey, noting that biotech is a shining area, too
BofA's S&P 500 Index year-end price target is 2450; that's four percent below current levels.
As for market risks, the biggest issue is the lack of one.
Source: Bloomberg Pro Terminal
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