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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: dvdw© who wrote (15517)	12/11/2002 2:51:00 PM
From: marginmike	Read Replies (2) \| Respond to of 19219

I dont want to break this to you guys, but for the last 3-4 months Rydex has worked better as smart money then as a contrarian, unless it is an extreme misalocation. I think we will rally into year end, but Rydex is failing as an indicator IMHO

To: dvdw© who wrote (15517)	12/11/2002 3:22:58 PM
From: Steve Lee	Read Replies (3) \| Respond to of 19219

Rydex funds have an increased bias to the short side compared to just a few years or even one year ago. This is due to the increasing popularity of ETFs such as QQQ and DIA. If you want to go long, then ETFs are a more efficient way of doing so than Rydex. ETFs on margin are more efficient than the leveraged Rydex funds. On the short side, Rydex continues to have advantages. One significant advantage is that you can't lose more than your original investment whereas a short position has "unlimited" losses. Another significant advantage of holding inverse Rydex rather than shorting an ETF is that many investors are not allowed to short in their accounts yet they are allowed to hold inverse funds. In summary, Rydex long funds are losing appeal faster than Rydex short funds. This is why increasing Rydex bearishness is not a contrary indicator, except at extremes. I have explained this exact same concept shortly after I started posting here, but was heckled for Rydex blasphemy without any coherent counter to the concept.