Financial Sense Home l Broadcast l WrapUp l Storm Watch l About Us l Contact Us
Sentiment Not Bullish Enough for Top
Chart Spotlight
by Carl Swenlin
DecisionPoint.com
December 1, 2006
|
The Rydex Cash Flow Ratio
is calculated by dividing the cash flow for bear plus money market funds
by cash flow into bull funds. As the Ratio index moves between its
trading range extremes, we can gage the amount of bullish or bearish
sentiment in the stock market. See the chart below. In June the Ratio
hit a level that signalled that an important price low had been hit,
and, even though the S&P 500 has rallied about 14% since then, the
Ratio only traveled about half the distance to the overbought side of
its range (red line), indicating that investors still have not fully
accepted the reality of the rally.
At first it was the bears that had refused to give up, but the following chart shows that, while the bears have since retreated, the rally has failed to recruit a sufficient number of bulls to drive the Ratio to bullish extremes.
The following table shows the results of our primary timing model as it is applied to a broad range of market indexes and sectors, and those results are unanimously and robustly bullish. Until those signals start switching to neutral (it is much too soon to get sell signals), I will not be concerned about the viability of the rising trend.
This table is updated for subscribers every trading day in the Decision Point Alert Daily Report. Bottom Line: The market is overbought as measured by many of our internal indicators, and it should experience a small correction or consolidation, but the Rydex Cash Flow Ratio has not reached a level where we should be concerned about a major top.
Technical
analysis is a windsock, not a crystal ball.
CONTACT
INFORMATION |
