Everyone Is Bullish - Again

After only four weeks of exposure to the stock market, my sentiment indicators turned negative again, leading my model to reduce its stock position to a net zero.  Last week showed internal weakness again as more stocks declined than advanced.  So far this year to date, my sentiment indicators have been zero or negative for 20 weeks - that is compared to only 15 weeks all last year and only a few weeks the year before that.  Basically, the possible good news seems to be discounted at current price levels and possible bad news has been disregarded by investors.  This has created a very unfavorable risk/reward ratio and I have retreated again to a fully hedged position.

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 remains at 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 continues to decline as option buyers get more aggressive.
Exposure declines to 20%, down from 35% last week. 
Small option buyers also continue to take a bullish view of this market.
Exposure declines to 5%, down from 20% last week.
NAAIM managers continued to reinvest their cash last week and are now fully invested again.
Exposure declines to -10%, down from 20% last week.
When one of my sentiment indicators is maximum negative and the other two are neutral or negative I assign a value of zero to the sentiment factor.  This is down from 25% 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 remained the same last week.
Exposure stays at 50%, same as last week.
Total valuation exposure is 17%, same as 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 0%, down from 31% 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 remained positive 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%, same as last week.

After adjustments, total exposure for the week is 10% or, after rounding, 0%.
This level of exposure does not exceed the current earnings cap and is down from 50% last week.