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Mutual fund investors bailed out of stock funds in a big way last week, giving both bulls and bears the chance to thump their chests.

An estimated $12.7 billion left stock funds between Tuesday and Thursday last week, according to a Monday report from liquidity tracker

. The outflow doesn't break any records, but it does give optimists the chance to point to a market bottom and pessimists an example of investors' flagging interest in owning stocks in a sagging market. (Check out

TSC's Metrics Page for more on fund flows.)

Mutual fund flows are closely watched as a barometer of investor sentiment. Pragmatism would say rising cash flows to funds indicate fund managers will have billions to stuff into the market, boosting stock prices, but it's often not that simple. In the up-is-down world of Wall Street, fund flows often prove to be a contrarian indicator. Translation: Sagging flows often presage a bottom for stock prices and at least a short-term bump because pessimism may be topping out.

The three-day outflow, about $8.6 billion from U.S. stock funds and the rest from global and foreign stock funds, is high compared to the $1.9 billion in-flows equity funds' are averaging so far this year, according to

That said, it's not surprising given stock prices' southward spiral. After a tough 2000, this year has been volatile with the

S&P 500


Nasdaq Composite Index

down 8.8% and 18.4%, respectively, according to

Baseline/Thomson Financial

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. Between Tuesday and Thursday alone the Nasdaq fell 6.5%.

The topsy-turvy nature of this year might make it tough to draw conclusions from fund flow data. The record for one-day outflows is $13.1 billion set back on Jan. 3, according to, but investors reversed field and set the one-day record for in-flows when they jammed more than $17 billion into funds the next day when the

Federal Reserve's

Open Market Committee

slashed its key fed funds rate.

This outflow comes on the heels of record one-month


in January, when some $140 billion gushed into funds, according to fund-tracker


. But that record doesn't necessarily mean much to stock investors since most of that cash gush was driven by institutional investors shifting into money market accounts which offer competitive yields for a month or two after an interest rate cut.

For his part, President Charles Biderman thinks the outflows point to at least a short-term bottom for stock prices.

"Historically, fund investors bailing big time has been an excellent indicator of a stock market bottom," he writes in his Monday liquidity report, where he declares himself "cautiously bullish" this week.

If there is any clear conclusion to draw from these estimates, it may be that fund investors are charting a less aggressive course than they have in recent years when growth-oriented diversified and sector funds got the lion's share of their cash.

In January, flows to less aggressive balanced and value funds were on the rise, as were cash flows to bond funds. At the same time, purchases and redemptions of sector-fund shares were almost flat, according to Lipper.

The most popular funds in the week ending last Wednesday were retail money market funds, which took in some $8.8 billion according to Bond funds also had positive in-flows, underscoring investors increasing focus on the risk portion of investing's perennial risk/reward proposition.