According to David Kostin, Goldman Sachs's chief U.S. equity strategist, U.S. stock markets will experience a pullback from their record highs at the end of February. Kostin said he believes that positions have grown "extreme" in the past five weeks — but he did say the S&P 500 could still end the year higher.
"The U.S. equity markets are likely to experience a pull-back some time in the next 4-6 weeks and that would be pretty consistent with the magnitude of an extreme reading we see in the commodities futures trading corporation data," he told CNBC Monday.
The investment bank has defined a target of 2,100 points by year-end for the S&P 500, and Kostin reiterated this again on Monday. The strategist also suggested, however, that the index could reach 2,300 points if the U.S. Federal Reserve holds back on any interest rate hikes this year.
Digging deeper into the CFTC data, analysts at Bank of America Merrill Lynch called the "long" U.S. equities trade one of the most crowded trades in the world, as were positive bets on the U.S. dollar.
Led by strategist David Woo, a team at the bank said the ratio between U.S. equities versus those of the rest of the world had just exceeded the level seen in 2001 at the peak of the dot-com bubble.
In a note released on Monday, Woo said that "a single investment thesis has been directing global capital flows over the last two quarters – the consensus that the decoupling of the U.S. economy from the slow growth of the rest of the world will continue. As a result, the (dollar) and U.S. equities have significantly outperformed."
Photo: CNBC
