Let me give you a stat. The date is May 26, 2008, and the S&P 500 closes at 1,400.38.

Now look at this. On Thursday April 5th the S&P 500 stood at 1,400.29.

That was a “wow” moment, folks. It meant the market wiped out ALL of the losses from the financial collapse.

Despite the recent fits and starts of the market, there is clear momentum. I’m not saying it will be a smooth ride (when is it ever in the stock market?), but I do see further gains ahead.

And the main reason is cash—truckloads of it are coming off of the sidelines and driving back into the market. All of which leads me to 3 bullish signs in the market that may portend the future.

Bullish Signal #1:

Cash Moves Off the Sidelines:

I love charts; they tell an entire story at just a glance. And, the one below shows just how much cash has already come back into the market. And, it also shows how much is left to go; the lines in this chart show the amount of cash that’s still on the sidelines. Back in the dark days of 2008, everyone took their money out of the market, and you can see that giant spike in the chart below. And you can see that even with the market’s recent gains, people and institutions still have historically high levels of cash ready to deploy. This is a major bull signal, and it means that it’s time to buy.

And I strongly urge you to heed this recommendation.

My current market outlook is that there will be a few more weeks of volatility until we get into earnings season, but that is when the rally will continue for fundamentally sound companies. What will happen is that since companies have been very smart with their cash and they are set to post stellar earnings results, investors will catch on, and more cash will come off the sidelines.

Bullish Signal #2:

Stock Buybacks

There are plenty of other signals that show that we have come full circle from the recession, one of which is how companies are deploying their own cash. During the recession, companies banked their profits and stuffed cash under their virtual mattresses until the coast was clear. Well, thanks to an improving economy and record-breaking stock market gains, that money is seeing the light of day.

The first thing companies are doing with their cash is buying back shares.

Apple (NASDAQ:AAPL) recently announced a $10 billion stock buyback program in addition to a dividend. Apple has been awash in cash for some time now, and management determined that one of the best things to do with it is to buy up shares, which boost earnings per share and prevent dilution for current shareholders. Considering that Apple has some $100 billion in cash at its disposal, this is a smart move. With its outstanding track record and culture of innovation, I have every expectation that Apple will become the first trillion-dollar company ever.

AutoZone (NYSE:AZO) also announced that the company is ramping up its stock buyback program by $750 million. According to company leadership, the auto parts retailer’s operating performance has been strong enough to justify generous share repurchasing programs without hurting the company’s debt rating. This latest initiative demonstrates the company’s ongoing commitment to return value to its shareholders.

Dollar Tree Inc. (NASDAQ:DLTR) is also aggressively buying back its stock, having repurchased $300 million in DLTR stock in the fourth quarter alone! In addition, Dollar Tree is clearly in growth mode; the company opened 21 stores and increased its retail selling space by almost 7%.

I could go on and on about how blue chip stocks are buying back their shares, boosting earnings, increasing shareholder value and fueling the stock market, but that’s not the only thing they’re doing that is lighting a fire under stocks. They’re using cash to buy up the competition.

Bullish Signal #3:

Mergers and Acquisitions

Other than buybacks, M&A activity is one of the best ways that companies can spend their excess cash. This kind of activity is always good for the market so I’m pleased to say that it is heating up.

Coty Inc., the maker of Stetson aftershave and fragrances by Jenifer Lopez and Beyonce, threw a bid out for $10 billion for Avon (NYSE:AVP). Avon has rejected the bid, but shares jumped 17% on the news.

Dell (NASDAQ:DELL) just bought software companies AppAssure Software Inc., Clerity Solutions Inc., SecureWorks Inc., Compellent Technologies Inc., DFS Canada Ltd. and Force10 Networks Inc., and has plans to buy software maker Wyse Technology Inc. in the near term.

Molson Coors (NYSE:TAPS) is buying StarBev (a European brewer) for $3.54 billion. This will add nine breweries, 4,100 employees and sales of about $1 billion annually to TAPs’ operations and will make the company one of the biggest brewers in the world.

When traders get excited about cash moving out of corporate coffers and into mergers and acquisitions, they start to anticipate which companies will make attractive takeover targets, and they move their cash into the market in a major way.

A Window of Opportunity

These bullish signals all point to one thing: Now is the time to be a stock buyer. If you missed out on the first round of profits, or are wondering about what to do with your cash, my advice is to put it into fundamentally sound companies and to do it now.

The market consolidation we’ve seen in the last few weeks has given you a window of opportunity to pick up shares in fundamentally sound companies before they take off again. My free ratings system, Portfolio Grader, is at your disposal, so check all of your stocks for free and then keep your eye on your inbox for important updates from me throughout earnings season and the market’s next leg higher.