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Updated from 7:24 p.m. ET to include additional commentary on Apple, Friday's economic data.



) -- The so-called smart money still thinks stocks have room to run. For the next three months at least.

The latest


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.

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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.

The improvement in the employment and housing markets has provided solid support for stocks in the face of Europe's uncertainty, rising energy costs, and ho-hum earnings results but investors should be aware that a blip in the data could prompt an outsized round of profit-taking. There's a bit of a

too quiet

feel about stocks these days, and some of the names leading the charge, like

Sears Holdings


for instance, look exceedingly vulnerable.

It should also be noted that hedge funds have been a little too smart for their own good. Morningstar released its MSCI composite hedge fund index earlier this week and found it gained 1.9% in January, far below year-to-date gains of 6.3% for the Dow and 8.4% for the S&P 500. The index is an asset-weighted composite measuring the performance of the roughly 1000 hedge funds in Morningstar's database.

As for Friday's scheduled news,

J.C. Penney

(JCP) - Get J. C. Penney Company, Inc. Report

is one of the few brand names reporting its quarterly results on Friday. The department store operator is slated to open the books on its fiscal fourth quarter ended in January before the opening bell, and the average estimate of analysts polled by

Thomson Reuters

is for a profit of 68 cents a share on revenue of $5.5 billion.

CEO Ron Johnson is well aware that he's not at


(AAPL) - Get Apple Inc. Report

anymore by now, and has boldly embarked on a transformation of the company. In late January, Johnson and the rest of the J.C. Penney's management team held a two-day event in New York to announce a plan that calls for "fundamentally re-imagining every aspect of the Company's business," and Wall Street took the news well, sending the stock up more than 20% almost immediately.

The company is envisioning a top-to-bottom change for J.C. Penney, including a new logo, a brand partnership with Ellen DeGeneres, a new "Fair and Square" pricing strategy, monthly promotions, and an effort to cut expenses by $900 million over the next two years.

The sell side isn't sold though with 12 of the 18 analysts covering the stock at either hold (8) or underperform (4), and the median 12-month price target at $39.50. There's definitely an argument to be made that the shares have seen an outsized benefit from Johnson's bold plan, as execution is by no means a guarantee.

Based on Thursday's close at $41.60, the shares are up 14% over the past year, hitting a 52-week high of $43.18 on Feb. 9, and the forward price-to-earnings multiple looks a bit rich at 19.4X.

Gilford Securities has a buy rating on the stock but the firm acknowledges a successful turnaround is far from a done deal.

"CEO Johnson's transformation of Penney may turn it into a profit rocket, as it was during its last runaround, when JCP soared to $87," Gilford analyst Bernard Sosnick wrote on Feb. 1. "But, it may take two or three years to develop and JCP shares appear likely to be vulnerable to a pullback before that."

Getting the message out could be a difference maker, Sosnick said.

"Sales might drop initially as customers adjust to the absence of promotional inducements," he said. "But a brilliant move might shorten the slide in sales as Ellen DeGeneres, acting as the spokesperson, explains on TV what Penney is doing. Investors were placated by Johnson's EPS guidance of $2.16 for 2012, but with tough comparisons in the first half and improvement later."

Check out TheStreet's quote page for J.C. Penney for year-to-date share performance, analyst ratings, earnings estimates and much more.

Other companies slated to open their books include

Alpha Natural Resources






E.W. Scripps

(SSP) - Get E. W. Scripps Company Class A Report


FTI Consulting

(FCN) - Get FTI Consulting, Inc. Report


Interpublic Group

(IPG) - Get Interpublic Group of Companies, Inc. Report



(TREE) - Get LendingTree, Inc. Report


Mobile Mini

(MINI) - Get Mobile Mini, Inc. Report


Newmont Mining

(NEM) - Get Newmont Corporation Report


Pinnacle West Capital

(PNW) - Get Pinnacle West Capital Corporation Report

, and

Washington Post



Elsewhere in corporate news, Apple will be a big topic again on Friday as analyst react to an annual shareholder meeting that was largely a non-event with no concrete news about a potential dividend.

The stock held up throughout the session and CEO Tim Cook was

quoted as saying

that both Apple's board and its management team are "thinking about this very deeply" when asked what the company plans to to do with its $98 billion cash hoard.

Apple has plenty of options as it could choose to make a special one-time payment to shareholders, go with a modest regular dividend, or start out with a payment for just preferred shareholders. The company could also just continue to hold onto the money, but Cook went on the record Thursday as saying the cash is more than what's needed to run Apple, so he didn't exactly thwart the speculation.

Credit Suisse offered up some analysis on Thursday ahead of the meeting while lifting its 12-month price target to $600 from $550. The firm has an outperform rating on Apple, and it estimates Apple will have $62 billion of excess cash over the next four years, a level it says is "sufficient to fund a dividend of $10 per share, or a 2.1% yield (in line with the S&P

500) as well as leave $22.5 billion for cumulative buybacks over 2012-2015 on a sustainable basis."

Apple's massive market cap was also addressed by Credit Suisse, which doesn't see the company's size as a problem yet, even though its forward price-to-earnings multiple has come down in the past few years (11X now vs. 25X in 2007) despite its "stellar" growth over that stretch.

"Our analysis of 22 years of data shows that only a small group of mega-cap companies have reached this relative size, with the real barrier to performance coming at 5% of S&P

500 (or a level of $650 ceteris paribus

all things being equal)," the firm said. "In addition, Apple reaches its current level within the S&P at a P/E of 11X consensus estimates, whereas other such mega caps had a median multiple of 24X. In other words, Apple has a far less risk of a further de-rating, suggesting that even reaching 5% of the S&P may not be a ceiling (


(IBM) - Get International Business Machines Corporation Report

reached over 6% in the 1980s)."

Check out TheStreet's quote page for Apple for year-to-date share performance, analyst ratings, earnings estimates and much more.

Friday's economic calendar features the final read on consumer sentiment for February from the University of Michigan at 9:55 a.m. ET, consensus is a tick up to 73.0 from 72.5; and new home sales for January at 10 a.m. ET, consensus is at 315,000.

Ian Shepherdson, chief U.S. economist at

High Frequency Economics

, is looking for a big upside surprise from new home sales, estimating the number at 350,000. He cites the strong performance of the homebuilder stocks over the past few months, saying it "suggests something is stirring in the new home market," as well as the weather.

"Another reason for thinking today's report will finally deliver evidence of a real lift in activity is that the extraordinarily warm and dry weather last month, relative to seasonal norms, ought to have boosted new home sales," he says. "Transactions are recorded when contracts are signed -- for existing homes, sales are measured at closing -- and that means potential buyers have to willing and able to visit new home construction sites. That idea is not appealing during a blizzard."

Shepherdson is also curious about the consumer sentiment data, saying the final reading could reverse an unexpected dip in the preliminary number. He thinks there could be upside not only tomorrow, but over the next few months.

"Consumers do not like rising gasoline prices, but we expect those concerns to be offset by the strong performance of the stock market and the sustained decline in the pace of layoffs," he says.

And finally, it was a busy after-hours session on Thursday with

(CRM) - Get, inc. Report

surging following its

solid earnings report

, while shares of two footwear companies --

Deckers Outdoor

(DECK) - Get Deckers Outdoor Corporation Report



(CROX) - Get Crocs, Inc. Report

-- fell out of fashion because of poor outlooks.


Written by Michael Baron in New York.

>To contact the writer of this article, click here:

Michael Baron


Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.