BALTIMORE ( Stockpickr) -- Mr. Market is returning to rally mode this morning, and he's got help from hedge funds. So far, the S&P 500 has rallied more than 11% in 2012, and professional investors are starting to take the hint.
In the trailing five months, hedge funds have been winding out bearish positions and buying stocks at their fastest rate in two years, according to data compiled by Bloomberg. That's a good sign for stocks as we head toward April. As demand moves into the equity market, large hedge funds' $13 trillion in assets could help to propel share prices higher.
And now, with the S&P sitting within throwing distance of an all-time high, there are some major psychological implications for traders. Plenty of eyes are on 1400 to start the week as the index attempts to hold a price level that's as of yet only really been flirted with in March. It's likely that a push above 1400 would bring some money from the sidelines back into active buying -- and with hedge funds already buying with both hands, that's a move that could give this rally some serious staying power.