Thursday, November 19, 2009

Rydex Market Timers: At It Again

The Rydex market timers are buying the dip to an extreme degree.

Figure 1 is a daily chart of the S&P500 with the amount of assets in the Rydex Money Market Fund in the lower panel.

Figure 1. S&P500 v. Rydex Money Market/ daily

Figure 2 is a daily chart of the S&P500 with the amount of assets in the Rydex bullish and leveraged funds versus the amount of assets in the leveraged and bearish funds.

Figure 2. Rydex Bullish and Leveraged v. Bearish and Leveraged/ daily


Anonymous said...

Thx guy for the data, much appreciated!

dacian said...

Hi Guy

I understand you don't like what you see; you also have a "blow off top" call on main ETFs (QQQ for instance) but you have a contrarian one in regional banks. And your chart analysis for regional banks says that while broad indices might draw a top, regional banks look like a good buy; interesting, let's see how this plays!

dacian said...

D-Man again

Anothe question on regional banks; can we interpret the fact that KRE underperformed is a sign of weakness? I noticed insiders are buying.

geckoman said...

What's interesting is that the Retail investor keeps selling stocks. So here you have Day trader wannabe's getting bullish while the dumb money is sliding out the door each week.

ICI data shows 13 consecutive weeks of equity outflows.

So how do you reconcile this?

Guy M. Lerner said...


Insiders are buying and I am intrigued by the fact that Regional Banks have underperformed; this is a tough market for them to outperform but considering the technicals and in particular, the low risk/ high reward, I thought it was worthwhile mentioning especially in light of positive insider buying.

Guy M. Lerner said...


I understand what you are saying and since the widespread use of ETF's and double and triple leveraged ETF's, I have wondered how relevant the Rydex Funds would be; if you are a retail player, why would you take the trouble to sign up with Rydex when you can get an Etrade account or some such thing and trade ETF's?

In any case, I can tell you that over the 9 years of Rydex data it has generally tracked the Dumb Money indicator well --in that, it signals bull and bear signals when it should; and the failures are just as bad

For our purposes here, it has been a reasonably good gauge over the last 6 months of short term sentiment swings

Anonymous said...

Well today show that rydex indicator do work!
But did they also bought today's dip?
I guess if not and if market jump up tomorrow I'll be looking very toward to your weekend sentiment analysis!

Johnny G. said...

As of Thursday's close:

Bullish & leveraged: 695.53
Bearish & leveraged: 393.16
Ratio: 1.77

Money market: 1,262.90

On a down day like Thursday, the effect of NAV changes is to reduce the ratio.

However, very modest net buying by the bulls and very modest selling by the bears has slightly muted the decline that otherwise would have occurred.

Money market remains near extreme lows.

Anonymous said...

Thx again Johnny, appreciate your input VERY mmuch!