All Clear?

A couple of weeks ago I asked whether the correction was yet another false alarm and, sure enough, new highs by the major averages mean that we'll have to wait longer for a more meaningful correction.  The broader market, though, continues weaker than the averages as the Russell 2000 is still down for the year as is my value portfolio.  Small investors and speculators are now busy buying calls again and reinvesting the money they pulled out a couple of weeks ago.  That momentum should push the market higher for the very short term but valuation remains terrible and sentiment never really got bullish enough to support some kind of meaningful advance.  Technicals have improved modestly so my model has increased its exposure to 50% this week.

Earnings:
I am adding in 2015 earnings expectations now that we are in the final half of the year.  This
weighted estimate for 2014-2015 is still in an uptrend.
As long as this continues, my first earnings indicator is positive.
Looking at earnings 52 weeks ahead, estimates are also in  a clear uptrend.
With both indicators positive, earnings exposure remains at 100%, same as last week.
Looking at the gap between last twelve month earnings and future 52 week projections, the
gap has reached negative levels and that gap is increasing.
The large and widening gap dictates a reduction in the earnings factor by 25%.
Total earnings factor exposure and maximum total exposure remains at 75%, same as last week.

Sentiment: 
The equity put/call ratio has reversed and is now declining again.  It is still at a neutral level, though.
Exposure remains at 50%, same as last week.
Small option buyers have also reversed course and are buying calls aggressively again.
Exposure declines to 20%, down from 35% last week.
NAAIM managers started to put some money back to work but their cash position is still neutral.
Exposure remains at 50%, same as last week.
Average sentiment exposure this week is 40%, down from 45% last week.

Valuation:
My long term valuation indicator remains negative as expected stock returns over the next 10 years are still below the yield on the ten year treasury and are now back below 2%.
This factor continues to call for 0 equity exposure.
Percentage of stock prices represented by net current assets remained the same last week.
Exposure remains at 0%, same as last week. 
Comparison of stock earnings yield to ten year treasury yield declined last week.
Exposure declines to 50%, down from 70% last week.
Total valuation exposure is 17%, down from 23% last week.

To get a combined exposure for these three factors, I multiply them together and then take the cube root.
This week, that number is 37%, down from 43% last week.

Technicals:
My comparison of yields on treasury bonds compared to lower quality corporates remained in a decline last week.
I subtract 10% to account for this factor. 
New highs - new lows on the Nasdaq increased to a positive position last week.  
I add 20% to account for this factor.
My trend indicator for new highs - new lows on the Nasdaq is also positive and requires no adjustment.
Total technical adjustments this week are +10%, up from -10% last week.

After adjustments, total exposure for the week is 47% or, after rounding, 50%.
This level of exposure does not exceed the current earnings cap and is up from 25% last week.