Neutral Position For Now

I've done some tweaking of the technical factors in my model in order to reduce risk with no anticipated reduction in return.  While this still looks like a bull market, I wouldn't want to take a strong position either way for now.

Earnings:
Estimates for 2013/2014 continued a modest improvement and remain in a positive trend.
Looking at earnings 52 weeks ahead, estimates are still in an upward trend as optimistic 
analysts stay very positive.
With both earnings indicators positive, my maximum earnings exposure is 100%.
Looking at the gap between last twelve month earnings and future 52 week projections, while the gap
is larger than I would like to see, it is still slowly declining.
There is no adjustment for the earnings gap so the earnings factor exposure is 100%, the same as last  
week.

Sentiment: 
Odd lot investors continue to become more cautious.  
Exposure increases to 35%, up from 20% last week.
Small option buyers continued to buy calls at a pretty high level, but not extreme.  
Exposure remains at 20%,  same as last week.
NAAIM managers put some cash to work last week.
Exposure decreases to 65% this week, down from 80% last week.
The sentiment factor remains at 40% this week, same as last week.

Valuation:
Percentage of stock prices represented by net current assets remained the same last week.
Exposure remains at 20%, same as last week.
Comparison of stock earnings yield to ten year treasury yield declined last week as interest rates increased some more.
Exposure decreases to 30%, down from 50% last week.
Total valuation exposure is 25%, down from 35% last week.

To combine these three factors, I multiply them together and then take the cube root.
This week, that number is 46%, down from 52% last week.


Technicals:
My comparison of yields on treasury bonds compared to lower quality corporates
remained positive last week.  I add 10% to account for this factor.
New highs - new lows on the Nasdaq are still positive.  I add 20% to account for
this factor.
Using moving averages, this week I am adding a trend indicator for new highs - new lows on the Nasdaq.  This indicator has been negative for several weeks and remained negative last week.  I subtract 25% to account for this factor.
Total technical adjustments this week are +5%, down from +30% last week.

After adjustments, total exposure for the week is 51% or, after rounding, 50%.
This level of exposure does not exceed the current earnings cap and is down from 75% last week.

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