U.S. stock markets will experience a pullback from their record highs at the end of February, according to David Kostin, Goldman Sachs' chief U.S. equity strategist, who believes that fund managers have become too bullish on the market.
Citing data from the U.S. Commodity Futures Trading Commission (CFTC), published on Friday, 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.
Goldman Sachs has stated a target of 2,100 points by year-end for the S&P 500, and Kostin reiterated this again on Monday. However, the strategist also suggested 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.
A team at the bank, led by strategist David Woo, 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.
"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," Woo said in the note released on Monday morning.