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Technology Stocks : Semi Equipment Analysis

SOXX 306.04

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Dec 26 4:00 PM EST

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To: Gottfried who wrote (29348)	3/15/2006 1:04:01 PM
From: Return to Sender	Read Replies (2) of 95640

Gottfried, I hope we can all agree that we can find charts that will support almost any point of view. Sometimes our viewpoints will be right. Other times they will not be. We all have biases. Kirk, is using some of the very same sentiment indicators that I follow to support his bullish bias. But I don't use the Rydex Nova/Ursa. Maybe I should but it would be a very minor indicator to me. Still it's going to be right some of the time. Lets see where Kirk's chart came from then do a little more research: schaeffersresearch.com Here is what Investopedia says about the Rydex Nova/Ursa: investopedia.com A sentiment indicator based on the Nova and Ursa funds from the Rydex Fund Group. The Nova fund is bullish with a target beta of 1.5. Whereas, the Ursa fund is bearish with a target beta of -1.0. The Nova/Ursa ratio is arrived at by dividing the total assets in the Nova fund by the total assets in the Ursa fund. A high value is bullish and a low value is bearish. A beta of 1.5 means that Nova has a target of 150% of the S&P 500 Index. Ursa's -1.0 means it has a target performance inverse to the S&P 500 Index. That is, if the S&P 500 is down 10%, Ursa should be up 10%. Rather than just measuring someone's opinion about market direction, this ratio shows where people are actually putting their money. And another opinion: wallstreetcourier.com A good sentiment indicator is the Rydex Nova/Ursa ratio because it is backed by hard cash and not just polls. It reflects the sentiment of the small guys who put their money into funds. Speculators who invest in the Rydex Nova fund are considered bullish on stocks because the fund has a target performance benchmark equal to 150% of the S&P 500 index (SPX). The Ursa (bear) fund is designed to provide a performance inverse to that of the SPX (also 150%) by using a combination of short selling and options on stock index futures. Investors in this fund are considered bearish on stocks. Specifically, we divide the total assets in the Nova fund by the total assets in the Ursa fund according to a proprietary formula to arrive at a Nova/Ursa ratio. A high Nova/Ursa ratio indicates an extreme amount of optimism (everyone investing in Nova) and is considered bearish by contrarians. A low Nova/Ursa ratio indicates an extreme amount of pessimism (everyone flocking to Ursa). This is a contrary indicator and a buy signal. For me I would not take this as a tremendously useful indicator. It may not be right when overly bearish to read a market bottom from it alone. I would like to see that overall levels of shorting including the put to call ratio were at extreme or high readings to support it. JMHO, RtS

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