Weekly Market Summary

Our overall view remains positive. There is no apparent weakness in either trend or breadth, and we are still in a seasonally bullish time period. For the 8th week out of the last 9, a majority of indices/sectors closed >13ema. This week: all 4 indices and 9 of 9 sectors

Sentiment changed this week, from neutral to negative; fund manager cash balances are at the low end of the range and equity weightings are high. Other sentiment readings are not extreme, however

Wall Street Sell Side Indicator is Mega Bullish

BAML's survey of Wall Street consensus equity allocations indicates significant bearishness. This is a contrarian indicator, and the current low levels suggests equities will rise 26% in the next 12 months.  The indicator is 47; when its below 50, returns the next year have been positive 100% of the time since 1985.

BAML Survey - January

There was a notable increase in bullish fund manager behavior over the past month. The highlights from the January BAML fund manager survey are as follows:

1. Cash balances have dipped to a very low 3.8% (4.1% in December 2012), lowest since February 2011. The typical range is 3.5-5%.
2. Equity allocations: a net 51% of fund managers are overweight equities (highest since February 2011). Just 35% overweight in December