BEHIND THE MONEY: Calls for Correction Most Since '07

More investors are calling for a correction in the stock market right now since June 2007, when the S&P began topping out just before the start of the credit crisis, according to a widely-followed sentiment survey released this morning. Almost a third of investment advisors surveyed by the research firm Investors Intelligence expect a correction, defined as a 10 percent pullback, to occur soon. That's up from 29 percent from the last reading in the weekly survey.

The research shop gives its participants (newsletter writers and financial advisors) three choices to classify their feelings: "bull", "bear", or "correction". Just over 46 percent are bullish on the market and 21 percent are outright bears.

This correction group is characterized as "mostly bullish, but they expect an intervening market retreat before the rally begins," wrote Mike Burke & John Gray of Investors Intelligence. "They look to buy on dips."

Some investors have been calling for a correction as far back as the start of the third quarter. But with this survey we are able to quantify those voices and find the bearish calls are the loudest since the last major top in the market. So it's time to give up and join them right?

Well, one advisor who called for a correction now needs another classification added to the survey: "Tired of Waiting".

"In bull markets, be they secular or not, it is rare to get anything more than a 7 percent to 10 percent correction," wrote Jeff Saut, Raymond James chief investment strategist, in a note to clients earlier this week. "While we have been looking for such a correction for more than a month, time is running out."

Saut said it's time to stop fighting the tape and that the higher highs in the face of these correction calls prove the sustainability of this advance.He recommended on last night's show buying the Proshares Trust Ultra S&P 500 , which is a double-down bet on the market and not for the faint of heart. Some other trades that he is recommending, but did not get to last night are Wal-Mart and the iShares REIT ETF .

Pete Najarian, co-founder of and FM trader, agrees with Saut that instead of a correction, the market could be confounding everyone by working off its so-called overbought condition through a sideways move for the last month. This pause has come even as earnings came in much, much better than expected. So in other words, the fundamentals caught up with the market, making it no longer so overvalued. Pete is watching the 1100 level on the S&P 500 as the line in the sand. If the market can hold that level, there will be no correction and a whole lot of investors will be forced to turn bullish like Saut did, according to Najarian.

The II pollsters also said they are seeing a lot of "indecision amongst the advisors." That is an understatement. Stay tuned tonight when we bring the leader of the "correction" pack on the show, Doug Kass of Seabreeze Partners. We will suggest a David Blaine type of stunt to him where he stays underwater or stands on a pole in Times Square until the S&P 500 falls 10 percent.

-With reporting by Prasanna Subramanian

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