InvestingFor millions of Americans, watching and waiting is the new day-trading-and the trillion-dollar question is when they’ll feel fully comfortable investing in stocks again. In the U.S. alone, investors still have nearly $900 billion parked on the sidelines, according to Thomson Reuters.

The tide finally began to shift this spring, when an upward bounce in the markets and upbeat forecasts from luminaries like Federal Reserve Chairman Ben Bernanke helped lure some investors out of hiding. Financial advisers say they’re seeing a surge of inquiries from clients about stocks. “It’s about 15 to 1 in terms of calls from people who want in versus out,” says Tom Hepner of Ruggie Wealth Management. And sentiment among fund managers recently shifted from “apocalyptically bearish to reluctantly bullish,” according to a survey by Banc of America Securities-Merrill Lynch.

The key word, though, is “reluctantly.” The recent rallies have eased some investors’ fears, but it will take a lot more prodding for others to get over the crash of 2008. Although the pros know that historically, stocks recover long before the rest of the economy, nobody wants to suffer more losses by getting in too early. Or, for that matter, too late: Some who missed out on this spring’s stock gains now fear that the market has no more gas in the tank. Misgivings like these explain why pros and amateurs alike obsess over their favorite economic indicators-from “TED spreads” (it’s a bond thing) to taxi-line wait times – trying to decide if the glimmers of improvement can translate into a lasting recovery.

With that in mind, we polled a slew of economists, managers and strategists to find out which signals will give them confidence that the worst is truly behind us. No single one of these indicators is a surefire green light. While any number of statistics-like weekly unemployment claims and surveys of sentiment among manufacturers-have helped to signal rebounds from the 10 recessions since World War II, few have hit the mark each time. TD Ameritrade Chief Investment Strategist Stephanie Giroux says that before she utters the words “a new bull market,” she needs to see “clear evidence on multiple fronts that the economy is starting to grow again.” For investors still smarting from last fall, waiting for multiple “go” signs has an appealing logic. Before they feel confident about the stock market’s risks, they want to feel like the other elements of their economic lives are secure.)

BUSINESS HIRING AND SPENDING

There’s probably no sign of the economy’s health that’s more closely watched than employment. Most companies begin to rehire only once they are confident the worst economic news is behind them. That often doesn’t happen until months after the market has turned around, so job numbers won’t help an investor catch the early edge of a rally. But for someone looking for signs of a sustainable recovery, they’re a useful gauge.

Economists and strategists pay particularly close attention to weekly unemployment-insurance claims-the number of people actually applying for employment benefits each week. When that number stops growing or even declines over a couple of months, it’ll be a signal that the negative economic cycle is winding down, says Mark Zandi, chief economist at Moody’s Economy.com. But investors who wait too long are likely to miss a rally. Traditionally, layoffs and other job losses keep rising even after the economy turns around, as employers adjust to new economic conditions. After recessions in 2001 and in 1961, job losses continued even after the recession had ended, says Birinyi researcher Rubin.

Job watchers also follow Labor Department stats that track demand for temps and the length of the average workweek, which reflects workers logging more overtime; an increase in either could be a glimmer of a turnaround. Once job losses begin to slow, Federated market strategist Phil Orlando thinks investors will shed the hunker-down mentality and buy growth-oriented stocks, including shares in energy companies.

New hiring won’t be the only sign that American companies are ready to spend and grow again. Brian Bethune, economist at IHS Global Insight, watches the prices that used commercial vehicles and construction equipment are fetching, either on eBay or at auction houses – he says it gives him a quick window on whether companies are feeling bullish. The pros also keep an eye on the monthly report from the Institute for Supply Management, which surveys purchasing managers in 20 industries who buy such varied items as cables, computers, packaging boxes and machinery. In the institute’s survey, a number over 50 suggests the economy is expanding; lately, it has hovered in the low 40s. Once it creeps back to 50, Orlando says he would buy industrial firms like General Electric.

Of course, anecdotal evidence matters, too. For Barry James, the president of the James Advantage mutual funds, attending religious services hasn’t been entirely uplifting of late. On most Sundays over the past year, James has left his church outside Dayton, Ohio, burdened with news of yet another batch of job losses among his fellow parishioners. On the other hand, he figures that when the Sunday finally comes that he doesn’t hear about layoffs, “it’ll be the first real sign the economy is stabilizing.” And better yet, of course, will be that Sunday when he starts hearing about his neighbors’ new jobs.

What to watch: Weekly unemployment claims. Look for a couple of months of slower growth or, better yet, declines.

Where to get them: Department of Labor.

Copyright 2009 The New York Times Syndicate