Still Positive

 As expected, there was some follow though to the previous week's rally and the market hit new highs again.  Not much has changed in the outlook but it would be nice if reported earnings were to pick up a bit.  It will be interesting to see what happens in the coming week as the budget battle reaches a climax.

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 have become more cautious and are now classified as neutral. 
Exposure increases to 50%, up from 35% 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 more cash to work last week.
Exposure decreases to 35% this week, down from 50% last week.
The sentiment factor remains at 35% this week, same as last week. 
 
Valuation:
Percentage of stock prices represented by net current assets remains at the lowest level possible.
Exposure remains at 0%, same as last week.
Comparison of stock earnings yield to ten year treasury yield increased last week as interest rates backed off.
Exposure increases to 50%, up from 30% last week.
Total valuation exposure is 25%, up from 15% last week.

To combine these three factors, I multiply them together and then take the cube root.
This week, that number is 44%, up from 37% 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 positive last week.  This
indicator is only a cautionary one and does not add to the technical total when
it is positive.
Total technical adjustments this week are +30%, same as last week.

After adjustments, total exposure for the week is 74% or, after rounding, 75%.
This level of exposure does not exceed the current earnings cap and is the same as last week.

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