US STOCKS-BofA measure of bullishness implies 19 pct gain for S&P

By Ryan Vlastelica

NEW YORK, Oct 1 (Reuters) - A measure of Wall Street bullishness rose in September, during a month when the S&P 500 hit record levels, but optimism is not so high that markets have become complacent, Bank of America-Merrill Lynch wrote on Wednesday.

The firm's Sell Side Indicator rose from 51.1 in August to 51.8, a five-month high, below what the firm considers "sell" territory.

"Given the contrarian nature of this indicator, we remain encouraged by Wall Street's ongoing lack of optimism and the fact that strategists are still recommending that investors significantly underweight equities," Bank of America wrote in a note to clients.

The Sell Side Indicator implies a 12-month value of 2,334 for the S&P 500, including dividends, a target 19 percent above current levels.

"Although this is not our S&P 500 target ... historically, when our indicator has been this low or lower, total returns over the subsequent 12 months have been positive 99 percent of the time, with median 12-month returns of +27 percent."

Index snapshot at 12:02 EDT:

* S&P 500 was falling 14.11 points, or 0.72 percent.

* Nasdaq Comp was losing 44.80 points, or 1 percent.

* Dow industrials was dropping 172.98 points, or 1.01 percent.

* Russell 2000 was falling 6.75 points, or 0.61 percent.

* S&P MidCap was dropping 6.12 points, or 0.45 percent.

* S&P SmallCap was losing 3.28 points, or 0.52 percent. (Editing by Nick Zieminski)