MarketWatch’s Mark Hulbert says that stock market sentiment has recently reached “dangerous proportions”, but also says that means little for longer term market performance.

In a recent column, Hulbert said that the average level of equity exposure among a group of market-timing newsletters he monitors through Hulbert Financial Digest was at nearly 94%, a level that, when reached, has been accompanied almost every time by a short term peak or near-peak in the Nasdaq Composite Index in recent years. “But notice also that, after each of those recent pullbacks, the market’s uptrend resumed,” Hulbert added. “It would have been a bad idea for someone on any of those prior occasions to have declared the bull market over and gone completely to cash.”

Hulbert analyzed historical data and found that up until about ten years ago, sentiment data “had its greatest explanatory power at the three-month horizon. That’s a short enough horizon already, but it has shrunk in recent years — and is now little longer than one month.”

Hulbert says the recent overly bullish mood “now tells us little more than that the market is vulnerable to a short-term decline lasting little more than a month — maybe three.” Sentiment won’t cause a new bear market, he says.