S&P 500 Analysis and Discussion Thread

Rydex Cash Flow Ratio

Simply put the Rydex Cash Flow Ratio measures the ratio of Rydex bear to bull type mutual funds that cash is invested in. Unlike sentiment guages, this indicator actually reveals the placement of the shee... uh.. investors at any given time. It is an extremely powerful tool that could have been used to nail the exact start of the 2003-2007 bull market. The following chart illustrates exactly when the last bullish investors capitulated and threw in the towel.

http://i44.tinypic.com/11rdsvd.gif

The next image is a long term chart of this ratio which sets up the context. We are now at the .75 resistance level that acted as support for the 2000-2002 bear market. It must be noted that this is an indication of extremely bullish sentiment!

http://i41.tinypic.com/30ry1xh.png

Looking at the current short-term situation reveals just how over-bought the market still is. Also of note is the fact that once higher lows were not being formed any longer in 2007, a new, lower area of support was established by the ratio at around 1.05. This is key level to watch, for a capitulation-driven break, similar to the one the occured at the beginning of 2003.

http://i40.tinypic.com/34zbknt.jpg

you may be right about the sp being overbought. it fell 5% today and ended just a hair above 800, may be the beginning of another down move after 2 days of consolidation. chances are i will open another short on the index tomorrow.

but i cant help but wonder whether the nov 08 low is a key reversal, fundamentals and techs says we are about to make new lows, but i cant help but wonder when this bear market will end

Monthly shows tops in and possible measured move down should we breach with bear power. I also would not rule out a bounce, but we shall see. The faster we move the tgt area the better. It will be ugly and devastating, but really it may be needed.

looking at the monthly chart, it looks like a triangle is forming. it could break either way, but i think we may see a nice bounce to 1000-1050 before heading lower. market is severely oversold and 800 seems to be holding so far.