With their low savings rate, consumers aren’t the only ones who have very little cash left in their bank accounts. Stock mutual funds don’t have much cash either.

And, that’s bearish, according to a newsletter editor who, 30 years ago, devised a market timing indicator based on mutual fund cash levels. I’m referring to Norman Fosback, currently editor of a service called Fosback’s Fund Forecaster. But, he is probably better known as editor (from the mid- 1970s to the late 1990s) of the stable of newsletters published by the Institute for Econometric Research, whose flagship service was called Market Logic.

(His tenure as editor of those earlier newsletters came to an end when Time, Inc. (now Time Warner) purchased the Institute. As Fosback often reminds his subscribers, the company chose to discontinue those newsletters soon after purchasing them, in the process, throwing away several decades’ worth of data and research.)

Fortunately, however, historical data on an indicator known as the Fosback Index survives, courtesy of Ned Davis Research.

In essence, the Fosback Index is a modification on the mutual funds’ cash-to-assets ratio. The idea behind the Index is to compare the level of funds’ current cash holdings with what that level should be, given the funds’ historical tendencies and current interest rates.

Fosback explains: “The Fosback Index… shows how much cash the funds hold relative to normal liquidity levels. ‘Normal’ is a function of interest rates because fund managers have an incentive to hold more cash in interest-earning money market securities when interest rates are high and less incentive when rates are low.”

Currently, because Fosback calculates that stock mutual fund cash levels are 1.7 percent lower than “normal,” the Fosback Index is minus 1.7 percent, which is bearish.

The Fosback Index’s track record suggests that we pay attention to it. Since 1965, its lowest -- and most bearish -- reading came in early 2000, right before the Internet bubble burst. At that time, the index dropped to below minus 3.

Its second-most bearish reading came in 1972, near the top of the market, prior to the punishing 1972 - 74 bear market. The index then was between minus 2 and minus 3. Its highest reading since 1965 was registered in 1990, when it rose to above 4 and correctly anticipated the bullish 1990s.

To be sure, the Fosback Index is not perfect. Or, at the very least, its signals can sometimes be very early. It spent most of the last half of the 1990s in negative territory, for example, and so followers of the index missed out on the explosive years of the latter part of that decade.

So, assuming that the future conforms to the past, the most positive spin we can place on the current Fosback Index reading is that the market decline it is anticipating could still be several years away.

Hardly a ringing endorsement of the market’s primary trend.

Mark Hulbert is editor of the Hulbert Financial Digest, a service of Marketwatch that, for nearly 24 years, has tracked the performance of investment advisory newsletters. A section of the Marketwatch website called "Hulbert Interactive" (marketwatch.com/hulbertinteractive) allows users to conduct extensive research on the HFD database.

Mark can be contacted via email at mhulbert@marketwatch.com