Figure 1.

Rydex Bullish and Leveraged to Bearish and Leveraged/ daily

1) The ratio of Bullish and Leveraged to Bearish and Leveraged: 2.34 2) Values <=1 (below blue line) means more bears than bulls and typically this is bullish for prices 3) Values >=2 (above red line) means more bulls than bears and typically, this is bearish for prices

Figure 2. Rydex Money Market Fund/ daily

1) High indicator value suggests fear as investors are seeking the safety of the money market fund; this is bullish for higher prices 2) Low indicator value suggests complacency as investors are fully invested; this is bearish for higher prices 3) The trading bands are set to identify values that are 2 standard deviations above normal over the past 40 trading days

Figure 2a. Rydex Buying Power/ daily

1) The Rydex Buying Power indicator assesses the amount of money on the sidelines; it is fuel available for buying 2) This indicator assesses considers both non committed money (i.e., assets in the money market fund) and committed money (i.e., assets in all of the bearish funds that could potentially wind up in bullish funds) as available money on the sidelines 3) The indicator is calculated by taking the sum of all assets in bearish plus money market funds divided by all assets in bullish plus bearish plus money market funds 4) Low indicator values suggest little money on the sidelines and are consistent with excessive bullishness (i.e., bear signals) 5) High indicator values are consistent with increased buying power and are consistent excessive bearishness (i.e., bull signals)

Figure 3. Rydex Relative and Absolute Combination Indicator/ daily

1) When the indicator is green bullish for higher prices 2) When the indicator is red bearish for higher prices 3) The indicator uses the total amount of assets in all bullish funds and the total amount of assets in all bearish funds; the indicator looks for both relative and absolute extremes in the data

Figure 4. Rydex Combo Indicator/ daily

1) Figure 4 is a composite indicator constructed from figure 1, figure 2a, and figure 3.

Figure 5a. $VIX/ daily

Figure 5b. $VXN/ daily

Figure 6. Rydex Total Bull v. Total Bear/ weekly

1) The indicator uses the total amount of assets in all bullish funds and the total amount of assets in all bearish funds 2) The indicator attempts to identify multi week swings 3) When the indicator is green, Rydex investors are bearish and there are more assets in bearish oriented funds than bullish oriented funds; in general, this is bullish for higher prices 4) When the indicator crosses above the signal line, prices tend to move higher

5) Indicator values >=58% lead to intermediate term tops

Figure 7. Rydex Buying Power/ weekly

1) The Rydex Buying Power indicator assesses the amount of money on the sidelines; it is fuel available for buying 2) This indicator assesses considers both non committed money (i.e., assets in the money market fund) and committed money (i.e., assets in all of the bearish funds that could potentially wind up in bullish funds) as available money on the sidelines 3) The indicator is calculated by taking the sum of all assets in bearish plus money market funds divided by all assets in bullish plus bearish plus money market funds 4) Low indicator values suggest little money on the sidelines and are consistent with excessive bullishness (i.e., bear signals) 5) High indicator values are consistent with increased buying power and are consistent excessive bearishness (i.e., bull signals)

My Comments

1) I will show three charts tonight and all 3 suggest that we are towards the end of the rally not the beginning 2) What do I mean by end of the rally? 3) The majority of gains are behind us 4) Or to put it another way: if you were not in the market 5 weeks ago then you will unlikely realize significant gains 5) The first figure is the 10 day moving average of the Rydex bullish and leveraged to bearish and leveraged ratio (figure 1 but with a 10 day MA) 6) The red dots show when the value is greater than 2.25

7) The next graph is the same as above but from earlier in the decade

8) The ratio of total bulls to total bears is >63% (figure 6); this is shown in the next figure 9) The red dots are those times this value is >63%

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