Rydex Total Assets Update for Wednesday, May 8th, 2002:
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Money Market 1.430 BILLION**BULLISH Overbought
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Regular Series: (100% Correlation to Index (Nova 150%))
SPX Long - NOVA 246.8 Million**BULLISH
SPX Short- URSA 285.2 Million**BULLISH
NDX Long - OTC 676.3 Million**BULLISH Double Oversold
NDX Short- ARKTOS 128.4 Million**BULLISH
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Dynamic Series: (200% correlation to Index)
SPX Long - TITAN 141.2 Million**BULLISH
SPX Short- TEMPEST 169.1 Million**BULLISH
NDX Long - VELOCITY 156.6 Million**BULLISH Oversold
NDX Short- VENTURE 207.0 Million**BULLISH Overbought
Sector Funds:
XAU Precious Metals 80.3 Million**BEARISH
XOI Energy 37.4 Million**BULLISH
OSX Energy Services 88.4 Million**BEARISH Overbought
BKX Banking 55.3 Million
BTK Biotech 183.5 Million**BULLISH Double Oversold
RUT 2000 - MIKROS 179.5 Million**BEARISH
RLX Retail 31.9 Million**BULLISH Double Oversold
Telecommunications 6.4 Million**BULLISH Oversold
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Market is going higher. I expect the SPX to hit SPX 1,112, COMP 1,755 and DOW 10,370 intraday highs within the next few days. Bearish sentiment and skepticism is alive as just as many were trying to pick bottoms, so also many are now looking and anticipating that rally to short into that has been rewarded to pavlovs dogs over the last eighteen months just like the buy the dipsters were rewarded in the new paradigm bubble melt-up.
The Final market tally from Bloomberg:
U.S. Stocks Rally on Cisco Profit Report; Merrill Lynch Surges
By Josh P. Hamilton
New York, May 8 (Bloomberg) -- U.S. stocks posted their biggest gain since September as higher-than-expected earnings at Cisco Systems Inc. sparked optimism the 18-month slump in demand for computer-related equipment is ending.
General Electric Co. stoked the advance, which lifted the Standard & Poor's 500 Index off a seven-month low reached yesterday, saying it will meet predictions for profit growth.
``For a sustainable rally, some high-profile companies have to show earnings improvement,'' said Robert Christian, chief investment officer at Wilmington Trust, which manages $27 billion in Wilmington, Delaware. ``Cisco could be the one that gets things going.''
The S&P 500 climbed 39.36, or 3.8 percent to 1088.85, the largest one-day jump since Sept. 24. Its index of technology shares surged 11 percent, the biggest since January 2001, and accounted for almost half the advance.
The Dow Jones Industrial Average rose 305.28, or 3.1 percent, to 10,141.83, led by International Business Machines Corp.
The Nasdaq Composite Index, down two-thirds from its peak in March 2000, surged 122.47, or 7.8 percent, to 1696.29, led by Cisco, Microsoft Corp. and Intel Corp. It was the Nasdaq's largest gain since April 2001 and eighth-largest on record.
Merrill Lynch & Co. boosted financial shares after the biggest brokerage said it is close to settling New York State's claims that it misled investors with biased stock research.
About 1.5 billion shares traded on the New York Stock Exchange, 12 percent more than the six-month daily average. Three stocks rose for every two that fell on the Big Board while advancing shares outnumbered decliners two-to-one on the Nasdaq Stock Market.
Rally `Has Legs'
The rally added about $401 billion to the value of U.S. stocks, according to preliminary data based on the Wilshire 5000 Total Market Index, the broadest measure of the market.
The groups with the biggest gains today in the S&P 500 - technology and telecommunications companies - have the biggest losses this year, reflecting investors' views they may have hit bottom.
``The rally has some legs,'' said Jim Stebbins, senior vice president of KWS Associates, the second-biggest brokerage on the floor of the Chicago Stock Exchange. ``It's so oversold already''
Cisco surged $3.19, or 24.4 percent, to $16. The company said yesterday after markets closed it earned 11 cents a share in the fiscal third quarter, excluding certain costs, beating estimates by 2 cents. Its sales rose for the first time in five quarters.
Two-Year Slide
A bellwether of the technology boom, Cisco shares fetched $82 in March 2000 and had a market value of $565 billion. Since then, earnings have tumbled, erasing $470 billion of value. Only Microsoft, General Electric and Cisco have had a market capitalization greater than $470 billion.
Microsoft, the largest software maker, gained $5.50 to $54.97, and Intel, the biggest chipmaker, advanced $2.83 to $28.98.
General Electric rose $2.20 to $32.85. The company said it is ``on track'' to meet its 2002 per-share profit goal of $1.65 to $1.67. Analysts have been forecasting $1.65. The company also said it expects double-digit earnings growth in 2003. Chief Executive Jeffrey Immelt said there are ``some signs'' of recovery in its economically sensitive businesses, such as plastics.
Valuation Concerns
,b>Even with today's advance, the Dow has gained just 1.2 percent for the year, the S&P 500 has fallen 5.2 percent and the Nasdaq has dropped 13 percent. Some investors say more declines lie ahead.
``Cisco is good news, but it's not a cheap stock and the market's not cheap,'' said Darcy MacLaren, director of equity research and a money manager at Safeco Asset Management, which oversees $30 billion in Seattle. The market is ``fairly valued, at best,'' she said.
The S&P 500 trades for 20 times expected earnings, down from 26 earlier in the year. With interest rates at these levels, fair value would be a PE ratio between 19 and 21, MacLaren said. ``Cheap is 15 to 16.''
Cisco trades at 46 times forecast earnings.
Cisco's rivals and suppliers surged. Its main competitor, Juniper Networks Inc., down 49 percent this year, advanced $1.19 to $9.62.
Brocade Communications Systems Inc., which makes switches for computer networks, rose $5.15 to $25.05. Communications chipmaker PMC-Sierra Inc. gained $3.01 to $16 and JDS Uniphase Corp., the largest maker of fiber optic parts used in data networks, advanced 47 cents to $4.34.
IBM, trading near its lowest since November 1998, gained $5.94 to $82.44. The largest computer maker's services unit resells and installs Cisco products in data networks.
Brokers Gain
Merrill Lynch rose $3.15 to $43.95. Merrill offered to pay about $50 million to settle charges by New York State Attorney General Eliot Spitzer that investment banking relationships compromised Merrill's stock analysis, the Wall Street Journal reported, citing unidentified people familiar with the matter.
Goldman Sachs Group Inc. rose $4.65 to $79.50, Morgan Stanley Dean Witter & Co. gained $3.59 to $48.49, J.P. Morgan Chase & Co. advanced $2.28 to $36.91 and Citigroup Inc. climbed $2.62 to $44.77. Spitzer also has been investigating Merrill rivals for conflicts of interest.
Dynegy Inc. slid $1.14 to $11.12, a 2 1/2-year low. The Securities and Exchange Commission intends to request a formal order of investigation related to a natural gas transaction called ``Project Alpha,'' the energy trader said.
The Russell 2000 Index of smaller stocks rose 10.77, or 2.2 percent, to 509.75. The Wilshire 5000 advanced 348.69, or 3.5 percent, to 10,328.87.
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Regular Series: 100% Long NDX OTC
Dynamic Series: 100% SPX Long TITAN
Best Regards, J.T. |
