investors pumped a record $19 bil. into bond funds

Record mutual fund inflows and outflows for July by Craig Tolliver

 U.S. mutual funds investors reached an emotional breaking point in July as investors capitulated, yanking a record $49 billion from stock mutual funds, Lipper, the mutual fund research firm, reported Monday. Safe haven investors pumped a record $19 billion into bond funds last month, according to analyst estimates. The previous record monthly outflow of about $30 billion for stock funds occurred in September 2001 -- in that case both triggered by fears after 9/11 and capping a cascading summer sell-off, Lipper said.

Merrill says stocks can gain more before peaking by Tomi Kilgore

Richard McCabe, technical analyst at Merrill Lynch, feels the equity market may be vulnerable to a short-term pullback, but doesn't believe it has reached a final peak. McCabe noted that short-term momentum indicators have reached overbought territory, but medium-term indicators haven't. Therefore, he feels the market has further upside potential in the coming weeks before the rally off the July lows tops out.

Morgan Stanley's Biggs says stock rally should continue by Tomi Kilgore

Barton Biggs, global strategist at Morgan Stanley, thinks the recent equity rally will last longer and carry further than the consensus, which expects a pullback, given that the July lows were marked by a "parabolic decline and massive capitulation that has not been seen for 40 years." He added that auto sales have been strong, refinancings and home equity loans are surging, corporate profits have turned up and money growth has accelerated. "I don't believe in the double dip," Biggs said in a note to clients. "Stay invested."