Still Hedged

  It has only been a couple of days since my last post so things haven't changed much.  Bullishness is pretty much universal and valuation remains very unattractive.  I continue to believe that we are approaching a period of poor market performance.  The risk/reward ratio looks awful.

Earnings:
Estimates for both 2013 and 2014 remain in flat or downward trends.  I am looking at 2014 estimates now and it is very possible that the trends coming from 2013 will turn negative soon.  It hasn't happened yet, though, so my first earnings indicator remains positive.
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,
the gap remains large but it is slowly shrinking.
There is no adjustment for this gap now since it is decreasing.
Total earnings factor exposure and maximum total exposure is therefore 100%, same as last week.

Sentiment: 
Odd lot investors remain extremely bullish and have reduced shorting to very low levels.  
Exposure remains at -10%, same as last week.
Small option buyers remain very bullish and are strongly purchasing calls.
Exposure remains at -10%,  same as last week.
NAAIM managers continue to be virtually fully invested in stocks. 
They remain in an extreme bullish position. 
Exposure remains at -10%, same as last week.
My sentiment indicators remain at maximum negative - now for a record three weeks straight.
In the current situation, I assign an exposure of -20% to my overall model.

Valuation:
My long term valuation indicator remains negative as expected stock returns over the
next 5-10 years are below the level of the ten year treasury bond yield.  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 20%, same as last week.
Comparison of stock earnings yield to ten year treasury yield remained the same last week.
Exposure remains at 20%, same as last week.
Total valuation exposure is 13%, same as last week.

With my sentiment indicators at maximum negative, I assign an overall reading for the above three factors of -20%.  This is the same as 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.
My trend indicator for new highs - new lows on the Nasdaq remained just barely positive last week.
No adjustment is necessary for this factor.
Total technical adjustments this week are +30%, 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 the same as last week.

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