"It is pretty near impossible to watch the market rally by four points and not get optimistic," he said.

There has been none so far in October, though the recent market rally might change that.

When the market rallies, the institutions often join the buyers.

Prospects for such a deal have helped fuel a powerful market rally in recent months.

"We think that the market rally has an awful lot left in it."

In the past, the participation of small investors has been considered a sign that a market rally was nearly over.

That would be reason enough to expect a market rally, according to contrarians.

With the market rally of recent weeks, they are coming back.

"We don't want to be caught short when certain sectors of the market rally," he said.

"Until the market rallies, I don't think they are going to move."