Goldman's Abby Cohen Boosts Equity Allocation

(Updated from 8:12 a.m. EST)

The market got a hefty shot of adrenaline this morning from a call out of influential Goldman Sachs chief equity strategist Abby Joseph Cohen, and futures did an about face to turn into the green. Earlier they were in the red.

Cohen raised her equity weighting to 70% from 65% and left 30% in bonds. Cohen hasn't changed her portfolio weightings since March of last year, when she lowered her equity allocation. "We believe that attractive equity valuation has been restored." She is maintaining her year-end target of 1650 for the S&P 500 and 13,000 for the Dow Jones Industrial Average .

Cohen has been the market's staunchest bull during the last several years, and made several prescient calls during the market's long upward run. In the summer in 1998, during the Russian default and Asian financial crisis, she notably urged calm when the financial markets were coming apart at the seams. Her March 2000 call, when she cut her equity allocation, proved to be smart, even if it wasn't a terribly aggressive pullback.

She's been quiet in recent months, at various times reiterating long-term buys on the market despite its ongoing problems. But today's call is the most emphatic she's been since early 2000. In her comment this morning, she writes that much of the economic and financial market imbalances have been resolved. She notes that risk aversion has become the order of the day, as cash ratios have jumped and balances in money market funds have increased dramatically. "Risks remain, but they are mainly of time, rather than further notable price declines," she wrote.

It should be noted, however, that Cohen cut her portfolio weight in technology and telecom to 32% from 35%. Currently, tech and telecom make up 26% of the S&P 500; a year ago at this time it was 45%.