The average U.S. stock fund's cash stake jumped 13% from the end of September to the end of October, indicating that the pros are having a hard time finding stocks they like.

The average stock fund had 6% of its assets in cash on Oct. 31, according to a report Wednesday from the

Investment Company Institute

-- the mutual fund industry's trade group. That's up from 5.3% at the end of September and 5% a year earlier. It is the first time funds' average cash stake has broken through the 6% barrier in two years.

A report from liquidity tracker

TrimTabs.com

on Monday estimated that as of last Wednesday, the average stock fund's cash stake was at 6.5% -- a level not seen since November 1997. If the firm's estimates are accurate, U.S. stock funds have taken in $122 billion in fresh money since March 31, but nearly half has stayed in cash.

The upshot: As U.S. stock fund managers sold stocks and banked checks from investors, they haven't been in any rush to put that money to work in a sagging market. That may portend a strong rebound for stocks once fund managers decide it's time to plow that money back into the market, but when that time arrives is anybody's guess.

"I think a rally will have to happen for the money to come back," says Charles Biderman, president of TrimTabs.com. "These guys will jump in then because they'll be afraid to miss it, and they don't want to show this amount of cash at year-end."

Over the last two years whenever funds' cash stakes have jumped more than 6% in one month, the market has headed north over the next 90 days, according to TrimTabs.com.

While most stock fund managers routinely say their mandate is to be "fully invested" in the market, it's been no secret to many observers that cash levels have been on the rise.

While these liquidity figures are just one part of a broad market picture, they are intriguing indicators. Money managers' whims are typically worth noting, not just because they represent the smart money, but also because their billions of dollars can move the market.

Hard to say how much fund managers' reluctance to buy stocks has contributed to the market's downdraft, but their reluctance, a slowing economy and the presidential election's contested results haven't helped.

Since March 31 the tech-laden

Nasdaq Composite

has fallen more than 45%, and the

S&P 500

is underwater too, according to

Baseline

. For the year the average large-cap growth fund, the largest U.S. stock fund category, is down 18.6%, and the average tech-sector fund is down more than 29%, according to

Morningstar

.

While the fund managers' tepid attitude toward stocks is hardly good news, it could lead to a sharp and lasting run-up later. If managers' fears about the election and economic slowing are quelled, that money could boost stocks in a hurry.

When stock funds' cash positions last hit 6.5% following the Asian economic crisis three years ago, both the S&P 500 and the Comp posted 24.8% and 26% gains, respectively, over the next 12 months, according to Baseline.

The average mid-cap growth and small-cap growth funds' had cash stakes over 6%.

Fund managers aren't the only ones who have favored the cozy, safe havens of money market or cash investments recently. In October, individual investors stuffed some $26 billion into money market funds, compared with a net $19.1 billion flow into stock funds, according to the Investment Company Institute.