Per Decision Point, 1/16/02 Rydex ratio (money market + bear funds/bull funds + sector funds) = .93
Contrary to contrary thinking, maybe a higher Rydex ratio (like a rising VIX trend) is bearish. Here's my reasoning. The trend of the ratio is starting to rise, as it did during each of the last big downswings (ending April & September.) It has been setting a series of higher highs during the big declines and vica versa for the big countertrend rallies (reached apx 0.55 early December). I think it's faking some people out because they are watching a moving target with directional importance. If we set another higher high on this Rydex ratio, the bigger picture suggests that the market won't swing up again until the ratio moves above 1.75, which was the last high in late September.
I'm not sure how useful any of these ratios are for day or intraday trading. I'm looking at patterns that take weeks or months to develop and, as a working stiffie, prefer to trade over longer time periods. The ratios do bounce around in their channels, possibly providing short term trading opportunities against the trend. All of this is easier to see then to describe, but the charts are at the Decision Point paid links.
This bearish upward trending pattern MAY be developing in the VIX and the 21 day MA of the put-call ratio, although I'm not sure that either has properly bottomed yet.
stockcharts.com[w,a]deolnyay[dd][pb13][vc60][ilp14,3,3!la12,26,9!lb14]
stockcharts.com[w,a]decanyay[dc][pb21][vc60][ilh14,3] |
