Wednesday, July 22, 2009

It Is Almost Comical

In an effort to continually punish the Rydex market timers, the market continues to defy the consensus at least over the short term here.

I recently showed how the Rydex timers, who have been leveraged and bearish, were slaughtered of late. After a one day reprieve (on Friday), these market timers are once again bearish and leveraged on the markets on Monday and Tuesday. Not surprisingly the market has showed persistence here. See figure 1 which is a daily chart of the SP500 (symbol: $INX) with the amount of assets in the Rydex bullish and leveraged funds (green line) v. the amount of assets in the Rydex bearish and leveraged funds (red line).

Figure 1. Rydex Bullish and Leverage v. Bearish and Leveraged Assets

While I agree with that posture -as in it is difficult to get too aggressive after last week - it is becoming comical to see these market timers continually on the wrong side of the market. It is one thing to be wrong and sitting on the side lines and not making money and a completely different dynamic to be in the market and wrong in your conviction and losing money.

We will continue to follow this saga!

1 comment:

phil said...

hi guy can you please clarify the rydex indicator. it appears that whenever the green and red lines cross (ie bearish funds down + bullish funds up), the markets go down/sideways- indicated by the red box area. Does that mean that based on the rydex indicator, markets will be going down? Also,where can we find a day to day rydex indicator? is it a well known published indicator?