NEW YORK ( TheStreet) -- Monday's late rally aside, it's probably a good thing that more investors are starting to feel bad about stocks. Gary Thayer, chief macro strategist at Wells Fargo, analyzed the ramifications of the shift that's gone on of late, noting the spike in bearishness among U.S. retail investors to the highest level since late June in last week's American Association of Individual Investors's sentiment survey. "During much of the past year, investors generally viewed the United States more positively than Europe," he wrote in emailed commentary on Monday. "That's probably because Europe was in the midst of its debt crisis while the end-of-the-year fiscal cliff was still several months away. Both regions have their challenges but investors seemed to be more concerned about U.S. problems now as the election and fiscal cliff get closer." Thayer sees this growing apprehension as a positive because markets will be more stable if the end of the year doesn't go smoothly. "There would probably be greater volatility risk if investors were complacent or too optimistic heading into the potential year-end tax increases and federal spending cuts," he said. "If the markets consolidate or pull back ahead of the fiscal cliff then investors are less likely to react significantly if elected officials struggle to avoid the scheduled tax and spending changes." Thayer thinks a status quo result on the political front could be the riskiest scenario of all. "Looking ahead, if the election leads to a continuation of the current divided government, we believe there will be a greater risk of going over the fiscal cliff as a maneuver to force a compromise that neither party would prefer if it controlled both Congress and the White House," he said. "Alternatively, if there is a change of control in the White House, we believe it is more likely that there will be a temporary extension of the current tax and spending levels as the new Congress and President would probably prefer to take time to develop substantial reforms." Meantime, Jefferies was pointing to company repurchases as providing some firepower to keep equities afloat now that QE3 is kicking in. "With the spread between US corporate bond yields at record lows and capacity utilization rates peaking, companies are borrowing at record amounts and buying back their own stock," the firm said. "The unintended consequence of QE quantitative easing is that companies are borrowing to invest in themselves rather than capex due to a lack of animal spirits."