Bears are dominating this fall, but in keeping with my theme this week I have more good news to throw on the positive pile. (See also: "It’s Not All Bad News.")

First of all, stocks are finally starting to differentiate themselves. Insurers, food makers, telecom, discount retailers, staples and utilities are doing a little better.

Although technology is still mostly suffering, regional banks are flat-lining. And there seems to be some momentum developing in the infrastructure theme (gravel, trucks, cement and engineers). (See also: "The Return of the Decider.")

Also, money flow and insider buying are both bullish.

The folks at Miller Tabak do a nice job of studying both, and here are their findings: The buying power of the public, derived from Federal Reserve Flow of Funds statistics, is 20.4%. At the end 2002, a cycle low, the figure was 12.5%. At the end of 1999, near the last cycle peak, this figure stood at 6.0%. So the current reading is extremely bullish.

Consider that prior to the current cycle, the Miller analysts considered 6% to be bearish and more than 11% to be bullish. The current level beats all former records by a large margin. So if people ever start to get interested in stocks again, there is massive amounts of fuel to push the market much, much higher.

Corporate insiders, usually the smart money, are going the opposite direction, which is very positive. Selling by corporate insiders has plunged since October, according to Miller Tabak, with net buying almost every week.

The latest weekly ratio of insider sell transactions divided by buy transactions is a super-low (bullish) 0.44, which is right around the eight-week average. That’s the lowest since the mini-crash of 1998.

Just to give you an idea, the 10-year average for the ratio is 3.10, so 4.85 or higher is considered fully bearish and anything below 1.35 is considered fully bullish. At the very bottom in October 2002, the level was 1.04.

Cash Flowing in the Wrong Direction

Yet let’s face it: It’s hard for bulls to make headway when the public hates stocks. Cash flow out of mutual funds is still cascading in the wrong direction.

Miller analysts say money market assets rose by 15.2% in the first 10 months of the year as the Wilshire 5000 fell 34%. Money market assets rose another $119 billion while stocks fell 8.5%, so once again investment dollars are flowing away from the arena. Cash flow has averaged -$17.2 billion per month in the last 12 months, an all-time record. Compare that with the $20.7 billion per month rise in cash flow per month from 1998 and 2000 and you see the difference between a bull and bear market.

The upshot is that the lack of public buying of equity mutual funds for so long a stretch is unprecedented. This means the public has been a negligible factor in the equity market for much of the last cycle, according to Miller. So with equity mutual funds impotent as a demand source for stocks, hedge fund demand has reigned supreme in the market — and that is why it has been so erratic day to day.

We are basically just seeing the bullish and bearish hedge funds engage in running gun battles every day, making for explosive trading patterns that formerly were masked by regular day-after-day buying by mutual funds.

One hedge fund manager told me that he’s instructed his trading teams not to keep positions overnight unless necessary because they’re getting the sort of volatility that used to be achieved over months every single day.

The bottom line is that we have an extremely oversold bear market with lots of insider buying, tons of cash on the sidelines and bears seemingly in disarray. Yet bulls can’t seem to capitalize on their good fortune by finding the strength and resources to push higher.

If confidence can just be boosted for more than a few days, we could have a really smokin’ rally up to the $SPX 1,050 to 1,250 levels where resistance still stands like a wall.

So what do we do in this environment? Check out my Trader’s Advantage letter for details.

This article was written by Jon Markman, contributor to InvestorPlace Media. For more actionable insights likes this, visit www.InvestorPlace.com.