Watching And Waiting

Another boring week as the S & P 500 tacked on a couple of more points.  I continue to take a very conservative approach, feeling that the risk/reward ratio is unfavorable at this point: 
 
Earnings:
Earnings results were surprisingly good last week.  Although the gap between last twelve month earnings and future twelve month earnings is large, it is not growing after last week's postings.  That means my indicator is now neutral and exposure goes to the minimum exposure of the other two earnings indicators, currently 100%, up from zero percent last week.
Twelve month forward earnings are still trending higher and improved last week as optimistic analysts increase their estimates.  This indicator is still positive at this point with 100% exposure.
2013 estimates are my third indicator and they too continue positive.  They also call for  100% exposure.  
Total exposure from  the earnings factor is 100%, up from 67% last week.

Sentiment:
Rydex leveraged fund investors got still more bullish last week  and this indicator continues in an extreme bearish position.  
Exposure from this indicator continues at  -10%, same as last week.
Small option buyers remain confused and are neutral.  In general, the put/call indicators are the only ones not looking very bearish.
Exposure remains at 50%, same as last week.
NAAIM managers continued to be very optimistic  and my indicator remains in extreme negative territory.   
Exposure remains at -10% this week, the maximum bearish level.
When two of my sentiment indicators are maximum bearish and the other one is either bearish or neutral, I assign a sentiment factor exposure of -10%, same as 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 improved last week. 
Exposure increases to 30%, up from 20% last week. 
Total valuation exposure is 25%, up from 20% last week.

To combine these three factors, I multiply them together and then take the cube root.  However, since my sentiment factor exposure is -10%, I assign a -10% overall exposure to the
model this week, 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.
Total technical adjustments this week are +30%, same as last week.

After adjustments, total exposure for the week is 20% or, after rounding, 25% compared to 25% last week.

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