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Stock Rally Still Hasn't Lured Average Investors Off Sidelines
CNBC.com | April 04, 2011 | 02:20 PM EDT

Though the market is coming off its best quarter in 13 years, the rally has been accomplished with only sporadic help from the mom-and-pop investors counted on to power the US economy.

While stocks surged, retail investors took money out and hedge funds plowed in, posting their biggest inflows ever in March while equity mutual funds broke a two-month streak of positive flows.

Another trend intensified: On up days market volume was weak—often less than a billion shares a day on the New York Stock Exchange—while down days saw significantly greater conviction as investors sought safety and the so-called "risk-off" trade.

It all amounts to a pretty resounding no-confidence vote in a market that nonetheless has nearly doubled the cycle lows it saw in the dour days of March 2009.

"All the fundamentals are good. We just had a very good labor report, the earnings picture is still very robust, there's a lot of momentum in the economy," says Brian Gendreau, market strategist with Financial Network, based in El Segundo, Calif. "But it doesn't seem to be translating into great enthusiasm for equities on the part of retail investors."

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