Well, I don't think you should panic-- the elevated uncertainties certainly suggest there is more uncertainty out there, and you have to not be overly-confident about the outlook. We are feeling good that parts of what we see playing out right now, particularly in Europe with the weaker Euro, we've built that into our earnings estimates. They could deteriorate, so I don't want to promise certainty on our earnings estimates, the $88 earnings outlook we have for 2011 for the S&P assumes a Euro of $1.23 on average.
It's the earnings that are supportive of the market at these levels and it's earnings as volatility comes down and confidence gets better, that should take the market to our price target of 1300 for this year, and 1350 over twelve months.
Particularly for long-term investors, I wouldn't panic, I wouldn't dump stocks. I'd nibble at the larger cap companies in the S&P that I think are going to do well.
~David Bianco, Head of US Equity Strategy, BofA Merrill Lynch Global Research, "Market Update: Is Volatility Back?", May 7, 2010