The Rydex market timers represent a small segment of the investing world. Nonetheless, their actions remain a useful window into the mindset of investors. The Rydex asset data is sentiment data, and it is based upon real asset flows. It is not an investor opinion poll. By tracking the money, we get to see how these investors are placing their market bets.

Rydex Asset Data

Figure 1. Rydex Bullish and Leveraged to Bearish and Leveraged Ratio/ daily

• The ratio of leveraged bulls to leveraged bears has climbed above a value of 7
• That’s 7x as many leveraged bulls as leveraged bears
• The last time the value was this high is shown by the red dots on the price bars
• This did not work out too well
   

Figure 2. Rydex Relative and Absolute Indicator/ daily

• This indicator considers relative and absolute extremes in the Rydex data
• The current value is (-1.97) and values of (-2) means that buying pressure is getting too extreme
• But there are two kinds of buying pressure; there is buying pressure or thrusts that are usually seen at the start of rallies; this was seen at the start of 2013 (see green oval on chart); and there is buying of exhaustion, which is usually seen at the end of rallies (see vertical bars)
• This used to be a more reliable signal leading to deeper market losses but in this era of central bank manipulation dips have been shallow; nonetheless, my sense is that this is buying of exhuastion

My Comments:

1) Bottom line: Buyers really want in to this market

2) Buying pressure is high

3) There are too many leveraged bulls

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