Shifting To Neutral

 Just a hint of concern as we reached the end of a losing week.  However most investors are looking at this decline as a buying opportunity.  More fear would be nice.

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 got a bit less optimistic last week.  This indicator is no longer extreme but it is still quite bearish. 
Exposure increases to 5% this week, up from -10% last week.
Small option buyers actually have become more bullish over the last two weeks as the decline progressed.  This is a very negative situation and needs to be watched closely. 
Exposure declines to 20%,  down from 35% last week.
NAAIM managers raised a little cash last week as they watched their holdings decline in price.
Exposure increases to 20% this week, up from 5% last week.
The sentiment factor increases to 15% this week, up from 0% last week. 

Valuation:
Percentage of stock prices represented by net current assets declined last week for the first time in many weeks.  Exposure is 0%, down from 20% last week. 
Comparison of stock earnings yield to ten year treasury yield was unchanged last week.
Exposure remains at 30%, same as last week.
Total valuation exposure is 15%, down from 25% last week.

To combine these three factors, I multiply them together and then take the cube root.
This week, that number is 28%, down from 0% 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.
Total technical adjustments this week are +30%, same as last week.

After adjustments, total exposure for the week is 58% or, after rounding, 50%.
This level of exposure does not exceed the current earnings cap and is up from 25% last week.

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