Market Preview: Stuck in the Mud

Updated from 7:58 p.m. ET to include information on the expected size of Facebook's IPO and Tractor Supply's report.

NEW YORK (TheStreet) -- That was a pretty weak ending to the strongest January for the S&P 500 in more than a decade.

Stocks are officially stuck in the mud. The Dow Jones Industrial Average may be up in four consecutive months, but the blue-chip index has also lost ground in six of the past seven sessions. The S&P 500 finished January on a four-session losing streak, and it's ranged less than 15 points over the past eight sessions.

A rally is a rally, of course, so it may be overly pessimistic to look in askance at the healthy gain that equities have enjoyed so far in 2012. Dow Jones Indexes points out that, since 1970, a positive January has been followed by a positive full-year performance more than 90% of the time.

But many investors may be thinking about taking some money off the table right about now. The economic data has just been so-so this month, and earnings season has been underwhelming. Morgan Stanley issued a note Monday, pointing out the cash holdings of the top 1500 companies has swelled to $1.4 trillion from a plateau of around $1 trillion in the 2004-2008 timeframe (ahead of the financial crisis) but that wasn't enough for the firm to get all that bullish about the broad market.

"Our core view for the year remains that the US economy will be constrained within a channel and that the stock market will not perform well when this sluggish growth is demonstrated in the news flow," Morgan Stanley said.

To capitalize on all those greenbacks, the firm said it thinks it's "sensible" for investors to amp up exposure to small- and medium-cap companies with the most cash in the tech, industrials and healthcare.

Wells Fargo echoed a similar lukewarm sentiment about stocks earlier Tuesday while noting that not only are earnings just so-so so far this quarter, the revenue performance is also underwhelming.

"In our opinion, the stock market is getting ahead of itself," the firm said. "We see only modest economic and earnings growth in 2012 and are not expecting much P/E expansion. We look for a correction in the nearer term but continue to believe the S&P 500 will finish the year in the 1325 to 1375 range."