U.S. Stock Market - Goldman Blinks !

Except for the Dow Jones Utility Average, every major U.S. stock market index ended lower today. However, the losses were minor across-the-board and the overall market had a firm tone at the final NYSE closing bell. Today’s volume was the lowest of the year so far at 2.67 million shares (NYSE). This past weekend’s historic snow storm in the Northeast probably contributed to the narrow range and slow trade.

Here are today’s closing marks, with changes from Friday’s close:

Dow Jones Industrial Average              13,971.24        -21.73              -0.16%           

S&P 500 Index                                        1,517.01        -  0.92              -0.06%           

NASDAQ Composite Index                     3,192.00        -  1.87              -0.06%           

Russell 2000 Index                                     913.03        -  0.64              -0.07%           

Is there any reason for today’s column?

I have two items of interest; one widely reported and the other not so widely reported.

First, Goldman Sachs has cut its short-term rating for global equities to neutral from overweight. Short-term is defined as a 3-month horizon. Goldman’s longer-term rating (defined as 12 months) remains unchanged at overweight. While I tip my hat to Goldman for being long stocks during the most recent advance, the rhetoric from this prestigious investment bank on this particular research note was less than earthshaking and basically said that stocks could go up, down, or sideways. Goldman goes out on a limb by saying that there may be downside risks attributed to possible U.S. fiscal and European sovereign issues over the near term (3 months).

Second, according to the National Association of Active Investment Managers (NAAIM – formed 1989) active investment managers had their largest ever exposure to equities at the end of January at 104%. This is a leveraged position and represents the combined average allocation to equities of 200 active managers overseeing approximately $30 billion (assets under management).  I know, I know, $30 billion seems like a relatively small pool of capital in the grand scheme of things, but what struck me here was the fact that the second most bullish exposure at 96% was recorded in 2007. The all-time highs in both the S&P 500 and the Dow Jones Industrial Average were posted in October 2007. Quite frankly, until today I had never heard of this organization. I gleaned this “golden nugget” from the research of John Hussman, head of the Hussman Funds. I hope we are both not grasping at straws here in support of our bearish views on the stock market, but I still think this information is noteworthy and may even represent a decent contrary indicator. NAAIM’s website can be accessed at www.naaimorg. The website for the Hussman Funds is www.hussmanfunds.com.

Bottom Line: As mentioned in this past weekend’s column, today was supposed to be a “turn date” in my technical work. I will admit to feeling a bit uneasy about my bearish view given the apparent resilience of the U.S. stock market to any bouts of profit-taking over the past six trading days. However, if you are NOT nervous with any forecast that calls for a major turning point, then you are probably flat out wrong. Of course, being nervous doesn’t mean I will be right with this bearish call, but for now I am staying with it.