Edit:Cash Flow Shows Wall of Worry
by Carl Swenlin
i am pretty sure this is a free access link.
if not i can post the text.
decisionpoint.com
i will post text--link will show charts also.
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<<CASH FLOW SHOWS WALL OF WORRY
2/16/2007
Cash Flow Shows Wall of Worry
by Carl Swenlin
Are we there yet? Are we there yet? Are we there yet? Many market analysts are still looking for a major market top, but price action shows no signs of weakness, and the trend continues upward. Sentiment polls such as Investors Intelligence, AAII, and Consensus show strong bullish sentiment, which is a bearish sign; however, our Rydex Cash Flow analysis suggests that a wall of worry is firmly in place and is helping the market to move higher.
On our Rydex Cash Flow Ratio chart below shows the ratio of bear fund plus money market cash flow divided by bull fund cash flow. When the Ratio moves to the top of its normal range it reflects extreme bullish sentiment, and readings near the bottom of the range show that investors are bearish. Currently, the Ratio is closer to the bottom of the range, and it has actually been moving lower over the last few months, even as prices have moved higher. While this configuration can warn of a price decline, it will not take much of a correction to put the Ratio down to a level from where new medium-term price advances are typically launched
It is also worth noting that, in spite of a price advance of around 18% since last summer, investor response has been remarkably tepid, as demonstrated by the Ratio's failure to move to the top of its normal range. In my opinion this means that there are far too many people ignoring the trend in favor of their personal belief that a bear market is an absolute and immediate certainty -- a belief they have held for many, many months. I am reminded of an unforgettable line from James Dines: "Don't think. Look!"
Bottom Line: The Rydex Cash Flow Ratio shows that investors have been extremely reluctant to accept the market advance from the summer lows. Until they do, the advance is likely to continue.
Below is a recent snapshot of our primary trend-following timing model status for the major indexes and sectors we track>>(one need hit link for this, as it format is to hard to copy and paste-max.) |
