Beware of the risk of a pullback! Goldman warns that US stocks are "overcrowded" and the buying at lower levels has exhausted.

Scott Rubner, a managing director and tactical strategist at Goldman, has warned that US stocks are about to enter a bear market. The global markets director said that the market was saturated and the appetite for buying on the dips was waning. He had previously been optimistic about the market outlook in 2025, but now he expects a negative turn. He said it was his “last bullish email” of the first quarter.“Everyone is in, including retail traders, 401(k) flows, year-end asset allocation and corporate cash,” he said in an email to clients. “The dynamics of demand are changing rapidly and we are approaching a seasonal negative phase,” he said.The S&P 500 has risen 3 per cent since the start of the year, and while this is little changed from where it was at the end of December, the market has shown remarkable resilience. Neither the DeepSeek scare nor President Trump’s tariff policy has triggered a significant sell-off, and the latest example of this was the market’s swift recovery from intraday lows on Wednesday despite the negative inflation data.However, Mr Rubner said: “What I am most confident about is that the ability to buy on the dips is weakening.” He said the trend-followers were particularly exposed to the risk of a slowdown in demand, with the commodity trading advisers expected to sell about $61bn of US stocks over the next month, compared with about $10bn in a bullish scenario.Corporate stock buybacks have been a support for the market, but the window for this activity closes on March 16. Meanwhile, Mr Rubner said that hedge funds had repositioned a lot of risk back into the market, with last week seeing the biggest net buying of global stocks since November.The buying power of retail traders remains a mystery for the past 22 trading days. These traders have been quick to buy on any dips, leading to “massive flows”, with three days seeing the most severe “imbalances” ever. These early-year flows tend to dissipate by March.Mr Rubner suggested focusing on tactical bearish trading strategies, such as the double binary options and put spread options on the S&P 500, or the combination of the Stoxx 50 index and the euro against the dollar, which he called “lookback put hedges”.