The mood of investors and traders in the US stock market continues to grow gloomier and this means that a speculator has got to ask himself whether there is a good buying opportunity at hand.
I do this by checking the market's position against my box theory calculations. If it appears to be near the bottom of some longer term boxes, then this coupled with the bearish sentiment we see means that it is a buy.
The S&P has been trending higher since October 2002 in boxes that have been about 186 points in height. The first box extended from the 768 low to 954, the second from 954 to 1140, the third from 1140 to a projected box top at 1326 (which I think is likely to be the bull market top later this year). The main thing to notice is that in March the market bounced off of the 1/2 point of this last box at 1233 and has now come down to the bottom of the box at 1140.
This is a very low risk buying opportunity in light of the very bearish market sentiment I think I am seeing.