Tony Dwyer, chief market strategist at Canaccord Genuity, is no bear. With a year-end S&P 500 target of 2,340, he is actually one of the most bullish strategists on the Street. But Dwyer is looking for certain things to happen before being an "aggressive buyer."
"We're kind of in this no-man's-land tactical condition for the market," Dwyer said.
Yet four signs would tell him stocks are "oversold," meaning that market dynamics would grant the brave an attractive opportunity to buy in.
First, Dwyer would look for the 14-week stochastic oscillator to fall to 30 or below. A measure of market momentum that compares an asset's price to its recent range, the stochastic indicator is now at 55.
To Dwyer, that "suggests a neutral rather than oversold condition."
Secondly, he would like to see the CBOE Volatility Index, better known as the VIX, rise to 20 or higher. The VIX measures the prices of options on the S&P 500, meaning that it rises as investors pay more for insurance against the market.
As for the specific level he's watching for, 20 is the VIX's famous long-term average, and Dwyer writes that "a VIX move above 20 has been a sign over the past two years the correction was nearing an end."
With the VIX closing Monday at 14.74, there currently appears to be little fear around stocks.