Market Preview: Smart Money Still Smitten by Stocks
Updated from 7:24 p.m. ET to include additional commentary on Apple, Friday's economic data.
NEW YORK ( TheStreet) -- The so-called smart money still thinks stocks have room to run. For the next three months at least.
The latest TrimTabs/Barclays survey of hedge fund managers found that 40% of respondents are still "markedly bullish" about the S&P 500 in February. That's down from 45.4% in January, but it's still the fourth-highest reading since January 2011.
Bearish sentiment picked up somewhat, rising to 35% for the month from 25% in January. The survey was conducted Feb. 14-17 and 105 hedge fund managers participated, said TrimTabs, which was also curious to see if the managers were correspondingly positive about the economy.
"We wanted to see if managers' bullish sentiment squared with their outlook for economic growth in 2012, so we asked: What will be the U.S. GDP growth in 2012?," the firm said. "Over 45% of the managers replied that that they think it will be somewhere between 2% and 3%, while close to 40% thought it would be somewhere between 1% and 2%."
For the next three months, nearly 30% of respondents said they felt U.S. equities would be the best investment with gold coming in second at 23%; oil third at 20%; emerging markets equities was fourth at 17.1%, and U.S. corporate bonds were fifth at 10.5%, getting "the fewest votes by a wide margin."
The smart money's view is lined up with how retail investors feel as the latest American Association of Individual Investors' sentiment survey for the week ended on Wednesday found the bull camp had swelled to 43.7%, up one percentage point from last week, and solidly above the long-term average of 39%. Bullish sentiment reached a near-term peak of 51.6% during the week ended Feb. 9. The AAII asks its members how they feel about the S&P 500 over the next six months.
Those leaning neutral about stocks for the next six months came in at 28.8%, while the bears totaled 27.5% of respondents. Both readings were down week-over-week and below long-term averages of 31% and 30%, respectively. The AAII has roughly 150,000 members but doesn't break down how many of those folks participate in the survey each week.
The takeaway is that, while the bulls have slowed their stampede in the past few weeks, they are still out in force. There's typically a lull in headline catalysts this time of year with fourth-quarter reporting season just about over, and that could work out fine for stocks, which have been on a slow and steady drift higher all year.
At the same time, skepticism is still out there about Greece (all of Europe really), and the major U.S. equity indices are creeping up toward resistance levels with the Dow Jones Industrial Average seeing some slippage at 13,000, and the S&P 500 getting close to its 2011 top just above 1370.