Mutual funds were designed for small investors, so it's tempting to assume that this year's massive flow to stock funds was simply the little guy again climbing aboard too late. There may be some truth to that. Even more money is controlled through institutions like trusts and pensions. At least in dollar terms, individuals are a distinct minority in the stock market today. One way is to look at the money they keep in money market securities, or cash.
Managers have to keep some cash to handle redemptions.
When the market is frothy, they keep as little as possible. Every dollar not invested in the market hurts performance. In a bear market, the reverse tends to be true. So cash levels tend to be lowest at market tops, highest at bottoms. Monitoring cash levels is, at best, an imperfect measure of the market.