Brace Yourselves For A Market Pullback. Another Market Metric Signals A Potential Top

Brace Yourselves For A Market Pullback. Another Market Metric Signals A Potential Top

A train departs a Wall Street subway station near the New York Stock Exchange (NYSE) in New York, ... [+] U. S., on Monday, Aug. 23, 2021. U. S. futures rose Monday along with stocks in Europe as concerns about China's wealth crackdown faded and traders took advantage of last week's selloff to pick up equities at favorable valuations. Bonds declined as demand for havens eased. Photographer: Michael Nagle/Bloomberg Mutual funds are currently holding a record low level of cash, according to a recent report from iconic Wall Street bank Goldman Sachs GS . That probably means that investors should brace themselves for a drop in the stock market. The level of cash being held by U. S. mutual funds, which specialize in holding stocks, dropped to 1. 6% on August 26, down from around 3% in 2016. The historical average is 2. 5%, the report states and describes the current level as a "record low MF [mutual fund] allocation." Put another way, equity-mutual funds own a higher portion of stocks than ever. On Wall Street, extreme readings, such as record lows or highs of holding a type of asset, are often seen as contrary indicators. When everyone is bearish