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Strategists at Bank of America Merrill Lynch agree that it is time for investors to become less defensive in their equity allocations.

"The risks of global financial collapse have been reduced greatly from last autumn when Lehman buckled and AIG required major government rescue," they said in a note to clients. "Similarly, the design of the administration's bank stress tests greatly reduces the risk of another major bank failure, in our view."

However, they don't advocate a stampede for more cyclical areas of the stock market, which outperformed more defensive areas during the two-month old stock market rally, but rather a slight tweak. For their recommended allocations, they've cut their exposure to staples by 2 percentage points and health care by 4 percentage points. They have then boosted their exposure to technology by 3 percentage points, industrials by 2 percentage points and energy by 1 percentage point.

"We are not ready for a large-scale move to favoring cyclicals and low quality, however, because in our view a full-fledged economic upturn remains a long way off," the strategists said.

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