Tuesday, February 16, 2010

Rydex Market Timers: Still Bearish

Figure 1 is a daily chart of the S&P500. The indicator in the lower panel measures the ratio of the amount of assets in the Rydex bullish and leveraged funds relative to those funds that are bearish and leveraged.

Figure 1. S&P500/ daily/ Rydex Bullish and Leveraged v. Bearish and Leveraged

The current value of the indicator stands at 0.93 suggesting that the Rydex market timers are bearish, and this is a bullish signal. See the recent strategy piece on how this signal is combined with the 200 day moving average.

After Tuesday's strong price move (albeit on weak volume), the Rydex market timers are starting to leave the sidelines. After 5 consecutive days of increasing assets, the Rydex Money Market Fund saw outflows on Tuesday. Maybe these market timers are warming up to higher prices? In any case, you can see the Rydex Money Market Fund chart by clicking on this link. In all likelihood, this is the type of download that I will be offering as a value added thank you for those readers who support the blog with a "donation". More to follow!

1 comment:

Anonymous said...

Before we write the bearish timers off, we need to see if the S&P breaks upside resistance first. Also, T-bond yields need to reflect such a move and they are presently indicating a pullback before going higher.