Manchester City was their best since his arrival at the club,
but admits defeat leaves them in "big trouble" in the battle to avoid relegation.
Allardyce replaced Dick Advocaat at the helm in October and
enjoyed a 3-0 home victory over fierce rivals Newcastle
United in just his second game in charge.
But the 61-year-old believes their display in the 1-0 defeat to
Manuel Pellegrini's title challengers was their strongest
since his appointment.
However, with the loss keeping Sunderland four points adrift
of safety in 19th, the manager admitted they are in a
dangerous position.
"While this performance was the best since I've been here,
we're in big trouble now when you look at the other results
tonight," he told BBC Sport .
"We missed too many chances today and when you play a
Manchester City side and have better chances than them, it
shows the level of our performance.
"There's no result for us, the points aren't there, but the
positives are."
Sunderland mounted an impressive end to the first half
and Pellegrini responded by replacing Kelechi Iheanacho
with Fernando, a move which Allardyce felt proved his side's
quality on the night.
"It was a testament to our performance that they pulled off a
striker at half-time and sent on a midfielder," he said.
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