Today we will look at BOTH ... our Fear Index and the VIX (Volatility Index) because they both are indicators of fear or confidence.

Below is the updated chart on our "Fear Index" which is a measure of what smaller investors are feeling.

June marked the end of an "Extreme Fear" level for investors. That turned out to be the bottom of the S&P 500's drop.

Investor confidence improved from there, and has improved in the past week ... but the red/blue trend lines remain in Fear Territory. The fast green indicator line is showing that confidence is accelerating to the upside and is now in Mild Fear Territory which obviously means confidence levels are increasing.

If anything, this is showing a positive expectation of Bernanke's upcoming decision on Tuesday.

The VIX (Volatility Index) is more of a reflection of what traders think about the market and what their confidence level is.

Interestingly, smaller investors are showing more confidence than the market traders.

The VIX's chart is showing that it remains above the red horizontal support (which is negative). The red, horizontal support line marks when the stock market went into a correction mode and is an important level that the VIX needs to drop under for traders to go into a "confidence mode".

If both groups can reach levels of positive confidence next week, then that would initiate a nice summer rally.

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