Unusual Sentiment

 The market snapped back last week, again approaching new highs.  Under normal circumstances, small investors and speculators would be becoming more bullish but now they are actually getting more cautious.  The anticipation of a correction is at a very high level so possibly it won't happen until new highs are recorded.  Earnings are the key, though, and they are showing signs of reversing their upward trend.

Earnings:
Earnings results continue to be flat to down as they are reported.  The gap between last twelve month
results and future twelve month expectations is now more than 27% and it continues to grow.
This indicator continues to suggest 0% exposure this week.
Twelve month forward earnings are still trending higher as analysts obviously think things will improve as the year goes along. 
This indicator is still positive at this point with 100% exposure.
2013 estimates are my third indicator and they showed a decline last week.  The uptrend is coming into question and it wouldn't take much to turn this indicator to neutral or negative. 
For now, though, this indicator continues to call for 100% exposure. 
Total exposure from  the earnings factor is 67%, same as last week.
  
Sentiment:
Rydex leveraged fund investors remained very bullish last week.
Exposure from this indicator remains at -10%, same as last week.
Small option buyers continued to move to a more cautious position, looking for a correction.
Exposure remains at 80%,  the same as last week.
NAAIM managers increased their cash position as the market rallied.
Exposure increases to 20% this week, up from 5% last week.
Average sentiment factor exposure this week is 30%, up from 25% last week.

Valuation:
Percentage of stock prices represented by net current assets remained the same last week so
exposure continues at 20%, same as last week.
Comparison of stock earnings yield to ten year treasury yield remained the same last week.
Exposure remains at 50%, same as last week.
Total valuation exposure is 35%, same as last week.

To combine these three factors, I multiply them together and then take the cube root.  This
week, that number is 41%, up from 39% 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 71% or, after rounding, 75% compared to 75% last 
week.

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