Investors are trying to determine if this week’s bounce in stock exchange traded funds marks a short-term bottom for equities or is simply a head fake before more selling.

The recent decline in the S&P 500 to a new 52-week low looks to be a “false break,” after which decent rallies often follow, according to Standard & Poor’s U.S. Investment Policy Committee.

“Market sentiment turned quite bearish over the past week, a potential positive for at least the near term. In particular, bullish sentiment on the Investor’s Intelligence poll fell to 34.4% this week while bearish sentiment rose to 45.2%,” it said.

“This is the largest spread favoring the bears since March 2009,” the S&P committee noted. Stocks hit bottom that month after the global credit meltdown.

Stock ETFs have rallied this week after briefly correcting 20% from the 2011 high. [ETFs Defy Bear Market Barometer]

“Even though the market could chug higher in the near- to intermediate-term, we still see the S&P 500 dropping into bear market territory either later this year or during the first part of 2012,” S&P forecast.

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