Moving In Again - Modestly

There has been enough improvement in my sentiment indicators to allow for moving a modest amount of capital back into the market.  Those improvements have been balanced by deterioration in the technical indicators due to recent market weakness.  With the geopolitical situation very unstable, it is easy to see why investors are on edge but earnings are actually coming in better than expected.  My model calls for some money to be put to work but only to a limited extent.

Earnings:
I am beginning to add 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 continued to improve last week.
Exposure increases to 50%, up from 35% last week.
Small option buyers have also become more cautious and have cut back on call purchases.
Exposure increases to 35%, up from 20% last week.
NAAIM managers finally decided that discretion was the better part of valor and increased their cash position in a meaningful way.
Exposure increases to 20%, up from -10% last week.
Average sentiment exposure this week is 35%, up from 0% 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. 
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 also remained the same last week.
Exposure remains at 70%, same as last week.
Total valuation exposure is 23%, 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 39%, up from 0% last week.

Technicals:
My comparison of yields on treasury bonds compared to lower quality corporates finally entered a decline last week.
I subtract 10% to account for this factor. 
New highs - new lows on the Nasdaq remained marginally negative last week. 
I subtract 10% to account for this factor.
My trend indicator for new highs - new lows on the Nasdaq is not operative since the previous indicator is negative.
Total technical adjustments this week are -20%, down from -10% last week.

After adjustments, total exposure for the week is 19% or, after rounding, 25%.
This level of exposure does not exceed the current earnings cap and up from 0% last week.