Buying Opportunity?

Even in the face of a moderate decline in the market last week, small investors and speculators were buying.  They think this is a buying opportunity and they are usually wrong.  In the final analysis, it is not about budgets, debt limits or government shutdowns.  It is about earnings and current estimates look too high- but they haven't turned negative yet. 
Earnings:
Estimates for 2013/2014 seem to have stalled but remain in a positive trend.
Looking at earnings 52 weeks ahead, estimates are still in an upward trend as optimistic
analysts stay very positive.
With both earnings indicators positive, my maximum earnings exposure is 100%.
Looking at the gap between last twelve month earnings and future 52 week projections, while the gap
is larger than I would like to see, it is still slowly declining.
There is no adjustment for the earnings gap so the earnings factor exposure is 100%, the same as last
week.

Sentiment: 
Odd lot investors turned around and were doing some buying last week. 
Exposure decreases to 35%, down from 50% last week.
Small option buyers continued to buy calls at a pretty high level, but not extreme. 
Exposure remains at 20%,  same as last week.
NAAIM managers put some more cash to work last week.
Exposure decreases to 20% this week, down from 35% last week.
The sentiment factor declines to 25% this week, down from 35% last week.

Valuation:
Percentage of stock prices represented by net current assets remains at the lowest level possible.
Exposure remains at 0%, same as last week.
Comparison of stock earnings yield to ten year treasury yield increased last week as interest rates backed off.
Exposure remains at 50%, same as last week.
Total valuation exposure is 25%, same as last week.

To combine these three factors, I multiply them together and then take the cube root.
This week, that number is 40%, down from 44% last week.

Technicals:
My comparison of yields on treasury bonds compared to lower quality corporates
remained positive last week.
I add 10% to account for this factor.
New highs - new lows on the Nasdaq are still positive.
I add 20% to account for this factor.
My trend indicator for new highs - new lows on the Nasdaq remained positive last week but just barely so.  As I write this, stock futures are substantially lower and Monday could be a difficult day for the market.  If this indicator goes negative, I will subtract 25% from my exposure.
Total technical adjustments this week, however are officially +30%, same as last week.

After adjustments, total exposure for the week is 70% or, after rounding, 75%.
This level of exposure does not exceed the current earnings cap and is the same as last week.

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