Though I remain a bear in this economic cycle and don't see a bull market in the cards for a long time, the seeds for a tremendous liquidity-driven rally, if only for several months, lay in the cash-hoard accumulating in money-market funds.

In yesterday's column I pointed out that stocks will probably muster a formidable rally in at least one calendar year under the Obama Presidency, similar to what occurred under FDR starting in mid-1932. U.S. stocks, after crashing a cumulative 86% from October 1929 to June 1932, powered ahead with a 372% total return from June 1932 until 1937. 

The fuel to power any sustainable future rally will come from the mountains of cash parked in almost zero percent-earning money-market funds. 

For the first time since 1994, U.S.-based money-market fund assets exceed the total under management in stock funds. That statistic in its own right is a heavily contrarian signal, suggesting stocks are heavily oversold.

According to the Federal Reserve, data through November show total money-market fund assets at $3.7 trillion dollars compared to $3.6 trillion dollars invested in stock mutual funds; equity fund assets almost halved over the last 12 months from $6.9 trillion dollars in late 2007.

It's no surprise to learn that many hedge funds have been shorting money-management stocks since late 2008 as earnings compress amid a deluge of investor redemptions. Worse, the big fund complexes now have to contend with money-market funds yielding almost nothing as management fees exceed the effective yield paid by those funds. Not a pretty picture for fund company earnings.

Another interesting snippet comes from Citigroup. The bank claims that retail money-market funds now account for more than 14% of the entire stock-market capitalization of the U.S. market -- far above the long-term average of 8%.

Like price-to-earnings ratios, book values or dividend yields, statistics like the above don't guarantee a major rally lies ahead for stocks. After all, since peaking in October 2007 U.S. and foreign stocks have mustered four false rallies with each short-term advance eventually breaking down to newer lows.

But the pool of money-market fund assets exceeding stock fund assets is nevertheless a powerful conduit for the bulls. If the market finally gets a major calalyst to sustain a longer term rally -- perhaps if the Fed starts buying back toxic assets directly from bank balance-sheets -- the market can skyrocket very quickly.