) -- 2011 was such a volatile year for that it makes sense that investors are finally fed up with pretending their opinions matter when it comes to where stocks are heading next.

The American Association of Individual Investors just published its

weekly survey of investor sentiment

, and the ranks of those who don't have a feeling one way or another about what direction the

S&P 500

is heading in over the next six months saw a major jump, reaching levels unseen in more than six and a half years.

The neutral camp swelled by nearly 12 percentage points to 38% for the week ended Dec. 21, well above the long-term average of 31% and the highest reading since 41.8% in mid-April 2005. The AAII has roughly 150,000 members that it polls each week but it doesn't say how many of those participate in the survey.

The swing brought the bulls down 6.5 percentage points from last week to 33.7% vs. the long-term average of 39%, while the bears lost 5.4 percentage points to 28.2% vs. the long-term average of 30%.

The shift makes some sense given the roller coaster ride the major U.S. equity indexes have been on since early August. December was dismal until the

Dow Jones Industrial Average

reeled off a gain of more than 300 points on Tuesday. Prior to that, there was a feeling of

here we go again

pervading the markets as stocks gave back all the gains they'd enjoyed from the build-up and resolution of Europe's super summit on Dec. 9.

Now, after Thursday's modest advance, the blue-chip index is up a little more than 1% for the month and 5.1% in 2011. That's a deal most investors would have signed up for in early October when the Dow spent a few sessions wallowing below 11,000. For the S&P 500, the story is less volatile but more middling as the index is still down less than 1% for 2011 on a price basis, although it's slightly positive from a total return standpoint.

The indecision is also understandable given all the forces at work right now. The bulls can cheer news that the U.S. employment and housing markets are picking up, but the bears still have Europe's uncertainty on their side.

The bulls could argue that Corporate America is coming off a strong third-quarter earnings season with the

S&P 500

delivering year-over-year earnings growth of 18%, and 70% of companies topping Wall Street's consensus view.

But the bears can counter by saying the outlook for the fourth quarter has weakened considerably. There have been 143 pre-announcements by S&P 500 companies and 94 of them have been negative, representing nearly 20% of the index. The estimated earnings growth rate for the S&P 500 now sits at 8.6% for the fourth quarter, according to

Thomson Reuters

, down from 15% on Oct. 3.

Throw in the deep political divide in the U.S. and the international questions beyond Europe like what kind of landing China's economy is in for and what will be the impact of the leadership change in North Korea, and it's no wonder plenty of folks decided last week they would rather concentrate on the holidays than venture another guess on what's next for stocks.

Another factor is likely the thin news flow. There's not much going on between now and the end of the year besides massive amounts of

Bank of America

(BAC) - Get Report

slushing around between traders. On Thursday, an incredible 302 million shares changed hands, 11% more than the issue's trailing three-month daily average of 272 million, even as the rest of the market is seeing volumes slow.

After closing below $5 on Monday, Bank of America's stock has rallied more than 10% to close Thursday at $5.47, giving traders plenty of room to bolt in and out of positions in between. It's been the new


(C) - Get Report

for a while now, and should provide some of the only fireworks to be seen between now and January.

There's no notable earnings reports scheduled for Friday, but still a fair amount of economic data with durable orders for November due at 8:30 a.m. ET, personal income and spending numbers for November at 8:30 a.m. ET, and new home sales due at 10 a.m. ET.

Still euphoric about Thursday's promising read on weekly initial jobless claims, Ian Shepherdson, chief U.S. economist at

High Frequency Economics

, is expecting more good news.

"We think all three reports will be positive with the potential for a hefty upside surprise in the new home sales report," he wrote, a scenario that would of course be conducive to a week-ending rally.

Shepherdson expects a 3% increase in durable orders vs. the consensus view for a rise of 2.2%; a 0.5% boost in nominal spending vs. the consensus of 0.3%; and new home sales of 350,000 vs. the consensus of 313,000.


Written by Michael Baron in New York.

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Michael Baron


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