Unconvinced

It was a great week for my model as I have now reached a 17+% gain year to date compared to +3.4% for the Russell 2000.  The interesting thing is that small investors and speculators remain unconvinced by the rally.  If anything, they got a bit less bullish last week.  This argues for continuing strength as long as other factors don't go off the rails.  Specifically, valuation is way too high but I continue to adjust for potential tax rate reductions that would make stocks look cheaper.  If the politicians cannot get their act together, the market will suffer.  Earnings were great in the first quarter and the trend of estimates 52 weeks out remains higher.  Unemployment was reported at 4.3%, a strong number in spite of the disappointing number of jobs added last month.  These factors are keeping my model in an unhedged, fully invested position.