BAML publishes a monthly report on fund managers' cash balances. On the Weekly Market Summary, you will see that we look for extremes above 5% (bullish) and below 3.5% (bearish).
Below are two charts from 2001-2012 from Short Side of Long. This excellent article on this subject is here.
In the first, the lines are for cash above 5%. The most recent signal was at the June 2012 low. Even in 2008-09, this turned out to be a very useful indicator of extreme panic. A Fat Pitch.
In the next chart, the lines are for cash balances below 3.8%. Red indicates a decent signal, yellow was not. Near a low in the market, I would ignore this signal; when the market looks on other measures to be too hot, then I would pay attention to it.
Like all sentiment measures, this is most useful at bottoms (events filled with panic), less useful at tops (processes that take time).