It seems like every week the S & P 500 gets rescued by European news. The average stock, on the other hand, declines just a little more. My indicators continue to weaken:
The trend in estimated earnings is still slightly down and that trend is accelerating. It could improve with a couple of weeks where estimates get raised but that doesn't seem likely.
Exposure = 0%, same as last week and shorting the market is a possibility.
Investors in the Rydex Funds continued to hold extremely bullish positions. This indicator has been bearish for so long that I took a close look at it to see if it still was worth following. I still think it is. Exposure = -10%, maximum bearish position.
NAAIM investors stayed very bullish last week.
Exposure = 5%, same as last week.
Small option buyers seem confused and have moved to neutral.
Exposure = 50%, up from 35% last week.
Total sentiment factor exposure = 15%, up from 10% last week.
Percentage of value represented by net current assets declined as the market advanced on
Exposure = 40%, down from 60% last week.
Comparison of bond yields to stock earnings yields remained the same last week.
Exposure = 50%, same as last week.
Total valuation factor exposure = 45%, down from 55% last week.
When earnings are trending down, I average the sentiment exposure and the valuation exposure and then subtract 100%. So (15% + 45%)/2 -100% = -70% (or 70% short). This is down from -67.5% exposure last week.
The trend in high yield bonds compared to treasuries is still in a very slight uptrend so I add 10%.
This week I subtract 10% because NH-NL is still negative.
Total technical adjustments are 0% and exposure = (70%), down from (67.5%) last week.
Two week moving average is -69%, down from -56% last week.
Richard Moore, CFA
With my wife in Hawaii