The comments below were provided by Peter Green of Fusion IQ.

The chart below shows the deviation in stock holdings by individual investors above or below their 22-year mean allocation of 60% to stocks. The chart is constructed with data from the American Association of Individual Investors (AAII) Asset Allocation Survey, which routinely surveys its user base to determine their current mix of stocks, bonds and cash. When investors are too far above or too far below this mean, it suggests either a depletion of investible cash or a large build-up in investible cash levels. When investors deplete their investible cash levels, stocks tend to top as there is no buying power left. Conversely, when investors build up large cash levels, stocks tend to bottom and rally as plenty of buying power exists.

Even with the current rally investors are still a few percentage points below their

The comments below were provided by Kevin Lane of Fusion IQ.

As seen below, the S&P 500 is making another attempt to overcome the convergence of a downtrend line (red line) from the 2007 peak and a resistance area (green line). This is the second time the S&P 500 will attempt to overtake this trend line after testing it on September 23 and then falling by 5,57%.

We will watch the action closely early in the week to see whether the index can surpass this level. If it can’t, a minor double top may come into play. The first support level below the S&P comes into play near 1 022 then 1 000.

Sentiment surveys, such as the American Association of Individual Investors (AAII), are still neutral and doubting as opposed to overly bullish and embracing. Since by and large investor sentiment remains sceptical, while sideline liquidity still remains

I am expecting a significant stock market correction at any time.

If you’re a regular reader of my columns, that won’t come as a surprise to you. And I’m not alone in that camp either. Analysts, strategists and investment directors all over Wall Street have been hesitant to put new capital into the markets.

For example, one hedge fund manager told me that he just can’t buy stocks at these levels - despite complaints from his partners who expect him to be fully invested.

And a technical analyst friend reports that the vast majority of his institutional clients are bearish.

And why not? We’re still hemorrhaging jobs… housing still stinks… and U.S. retail and food sales plummeted 9% in June, compared with June 2008.

But the market keeps going up.

This is what is known as climbing the wall of worry. Let me explain what this means - and what it means for us when it

I posted an opinion poll about the outlook for the US stock market on Tuesday last week. In essence, the poll set out to determine readers’ views about the direction of the stock market over the next few months. More specifically the poll asked about the level of the S&P 500 Index (893 at the time of the poll) by the end of September 2009 and December 2009 respectively.

A total of 615 people participated in the September poll and 511 in the December poll, answering as shown in the tables below.

The S&P 500 improved on the first three days of the poll, but declined marginally on the last day, leaving the Index 2.9% higher

The S&P 500 rally is beginning to look a bit tired.  The price action is more sideways than up and the volume is declining.  That may just be the pause that refreshes, or it may be the pause before a retracement.

Some important indicators, such as the VIX, the rate spread between LIBOR and Treasuries, and the relative performance of high yield and investment grade corporate bonds are supportive of the positive S&P 500 direction.

On the other hand, the cyclic price action demonstrated in the past 15 years, which is well tracked by trend following methods, suggests that we are not yet in a bull phase.

Of course there is more upward movement somewhere in the future to get us to a bull phase, and we could be in that transitional period now. It’s just that we have a hard time looking past the the economic situation which really stinks once your

Forget Market’s Fear, Follow MSFT

by The Investment U Research Team

Looking at some of the headlines this morning doesn’t inspire a whole lot of confidence:

Wall Street in Retreat Mode, United States Lost Decade, Are Stocks a Loser’s Bet?. These headlines read as odd and over-anxious considering that markets rallied all last week.

It’s not like we didn’t see the S&P 500 (.INX) rally almost 6.5%.

So where does this reversal of opinions come from? Good question. We’ve been looking at seemingly over-exuberant markets for more than a month now, which have been climbing on negative news. And we don’t believe the reason is what you think.

The American Association of Individual Investors (AAII) has conducted a monthly survey on how we allocate our money between stocks, bonds and cash. And per

Insider Buying: The Best Buy Signal You Can Get

by Alexander Wissel, Editor in Chief, Investment U

Did you miss the perfect insider buying opportunity? You might have.

Over the past two months stocks have climbed almost 40%. After hitting historical lows - and being completely oversold - the markets have been clawing their way back up, week by week.

And even with the ugliness caused by the release of the banking stress tests last week, it doesn’t look like we’ll be seeing values plunge. There’s simply too much money sitting on the sidelines, and it’s slowly creeping back in.

Since 1987 the American Association of Individual Investors (AAII) has conducted a monthly survey on how we allocate our money between stocks, bonds and cash. And per the most recent survey, the percent of direct investments in individual stocks is at an all-time low of 17%, nearly half the

So the Nasdaq snagged that eighth-straight week of gains after all. A flurry of buying at the end of the session saved the day. That the IBD 100 led the way with a 2.8% gain for the week is what impresses me though. According to my records, there were 62 winners to 38 losers. GMCR, of course, went on the warpath to the tune of a 35% plus gain, leaving in its wake the carcass of many an unwise short-seller. Even before blowing away earnings, GMCR had printed a new all-time high and formed a very bullish three-weeks tight pattern. I remember quite clearly Bill O’Neil being asked at a workshop last December what most caught his attention when he looked at a stock’s chart: “Tight closes,” he said. “When you see tight price action you’re seeing institutions at work.” …

What is “risk” for investors?  We think it is a broader, more important and more perilous issue than most investors have recognized for many years.

A typical “measure” of risk in stock markets has been standard deviation of return (the variability of returns around a long-term mean).  Yet, a typical “measure” of risk in the bond market has been credit quality (the likelihood of payment default or bankruptcy).

In a “normal” market, more risk (volatility) means more return in the long-term. However, “normal” is often defined in terms of the post-WWII period, which is really quite short-term considering the expanse of the history of money and investment, and perhaps not representative going forward.

The world is changing.  Economic power and leadership is shifting. New winners and new losers will arise, perhaps unseating former market leaders — some catastrophically.

Situational awareness and adaptive response is necessary.  Part of situational awareness is greater attention to the

Tune into the financial media and you’re guaranteed to hear an “expert” call the stock market’s bottom at least once a day.

They just can’t help themselves - which I suppose isn’t surprising, since they don’t really have much to lose by doing so.

The way they see it is: If they’re wrong, chances are we won’t remember anyway. And if they’re right, they can crow about it for years.

They are in fact wrong. But they’ll probably claim victory in the next few weeks or months. Sentiment is so bad that many are claiming this contrary indicator signals the bottom is in.

Current Investor Confidence- All Hail The Doom

In recent weeks, we’ve seen two confidence surveys that paint a pretty grim picture…