<p><img src="https://static4.businessinsider.com/image/602404d867d1e300113c5422-2400/GettyImages-1207623357.jpg" border="0" alt="Trader" data-mce-source="JOHANNES EISELE/AFP via Getty Images" data-mce-caption="Traders work during the closing bell at the New York Stock Exchange (NYSE) on March 18, 2020 at Wall Street in New York City" data-link="https://www.gettyimages.co.uk/detail/news-photo/traders-work-during-the-closing-bell-at-the-new-york-stock-news-photo/1207623357'adppopup=true"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><ul><li aria-level="1"><strong>Stocks could correct as much as 10% before April, but investors should buy the dip, according to a Tuesday note from Bank of America.</strong></li><li aria-level="1"><strong>Exuberant positioning and the rise of speculative investments may spark the 'buyable' correction, BofA said.</strong></li><li aria-level="1"><a href="https://newsletter.businessinsider.com/join/4np/10-things-opening-bell'utm_source=markets&utm_medium=ingest'utm_source=markets&utm_medium=ingest"><strong>Sign up here for our daily newsletter, 10 Things Before the Opening Bell</strong></a><strong style="color: #222222;">.</strong></li></ul><hr><p>'Exuberant positioning" in the stock market could indicate a 10% correction is up ahead, but it will be a buying opportunity for investors, according to Bank of America analysts. </p><p>"We expect a buyable 5-10% Q1 correction as the big 'unknowns' coincide with exuberant positioning, record equity supply, and 'as good as it gets' earnings revisions," said a team of BofA strategists in a Tuesday note. <br><br>The <a href="https://markets.businessinsider.com/index/s&p_500">S&P 500</a> has already gained 4% in 2021 as the market climbs to new highs. Amid the broad rally, investors desperate for more returns have been turning to more speculative investments like cryptocurrencies, SPACs, and crowd-sourced trading, said BofA. </p><p>The number of SPAC offerings in January alone exceeded the last six years combined, while the GameStop crowd-sourced short squeeze sent the stock up 2146% on an intraday basis, the firm said. </p><p><em><strong>Read more: </strong><a href="https://www.businessinsider.com/stock-market-bubble-ray-dalio-warns-weak-returns-interest-rates-2021-2" data-analytics-position="3" data-analytics-module="">Ray Dalio says investors are staring down a period of weak returns as low rates inflate asset bubblesand warns we're in the 'problem' part of the current cycle</a></em></p><p>Meanwhile, Bank of America's <a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-euphoria-and-dangerous-optimism-creep-higher-2021-2-1030034644">sell-side indicator</a> is signaling that the stock market is on the verge of "dangerous optimism."</p><p>As these speculative investing methods combine with rising market exuberance, a correction of up to 10% may occur. But the strategists say the correction will be a "good buying opportunity."</p><p>It's a similar call to Jefferies' equity analysts who said on Monday they will be <a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-jefferies-correction-buy-dip-bubble-burst-retail-2021-2-1030056590">buying any dips if the market corrects.</a></p><p>Bank of America has a 2021 year-end price target of 3,800 for the S&P 500, a 2.8% decline from Tuesday's close.</p><p> </p><p><a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-buying-opportunity-exuberant-positioning-bofa-q1-2021-2-1030067985#comments">Join the conversation about this story »</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/electric-planes-future-of-aviation-problems-regulations-2020-3">Why electric planes haven't taken off yet</a></p>
Click here to read full news..
