Advisors' confidence in the economy and the stock market improved in May, to a reading of 100.48—up nearly seven points from 93.59 in April, according to the most recent information available from Security Global Investors, a Rockville, Md.-based investment management company. May's reading of the Advisor Confidence Index (ACI) was the highest level reached since October 2007.

Advisors were more upbeat about current economic conditions than future outlooks. Confidence in current conditions was up 27.14%, while six- and 12-month outlooks moved up 14.20% and 3.47%, respectively. Advisor outlook on the stock market, however, slipped 5.68%, implying that advisors felt recent gains in equities might be fleeting. It was the only component of the barometer to go into negative territory.

Most advisors saw more sustainable opportunities for the near term, rather than six or 12 months out, according to Maya Ivanova, a senior research manager for Security Global Investors.

Overall, stronger advisor confidence stemmed from recent signs of economic revival, including consumer confidence. The Consumer Confidence Index (CCI), tracked by The Conference Board, also had two consecutive months of considerable improvements. "Financial professionals have better understanding and a better feel for the current economic situation," Ivanova says.

"Long leading indicators turned up in November, which is also when credit stresses peaked," says Bill Ramsay, a principal at Financial Symmetry, Raleigh, N.C. "Many stocks also saw their lows in November even though the indices hit a new low on March 9."