• 288 days Will The ECB Continue To Hike Rates?
  • 288 days Forbes: Aramco Remains Largest Company In The Middle East
  • 290 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 690 days Could Crypto Overtake Traditional Investment?
  • 695 days Americans Still Quitting Jobs At Record Pace
  • 697 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 700 days Is The Dollar Too Strong?
  • 700 days Big Tech Disappoints Investors on Earnings Calls
  • 701 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 703 days China Is Quietly Trying To Distance Itself From Russia
  • 703 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 707 days Crypto Investors Won Big In 2021
  • 707 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 708 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 710 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 711 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 714 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 715 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 715 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 717 days Are NFTs About To Take Over Gaming?
Trade In Counterfeit Goods Hits Half A Trillion Dollars

Trade In Counterfeit Goods Hits Half A Trillion Dollars

The counterfeit market has breached…

How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

Whatever Happened to Buy The F'ing Dip?

This week's Chart of the Week video looks at the equity market and asks: Whatever Happened to Buy The F'ing Dip? So let's get technical.

The SP500 is off a little more than 4% from its highs, and I am sure this must have many an investor worried. Furthermore, the markets have gone nowhere in the last 3 months or since Federal Reserve Chairman, Ben Bernanke, assured us that QE would continue in perpetuity. Wasn't that the "all clear" signal back then? Oh well...

Some aspects of the sentiment picture are turning favorable (i.e., showing increasing number of bears), but others, like the Rydex asset data, continue to show too many leveraged bulls. While the Rydex market timers only represent a small segment of the investing world, their actions remain a useful window into the mindset of investors. The Rydex asset data is based upon real asset flows, and through this, we can gauge how investors are placing their bets.

This is a daily chart of the SP500. The red dots over the price bars are those times that the Rydex Bullish and Leverage to Bearish and Leveraged ratio is greater than 4. This means there are 4 times as many assets in leveraged bull funds than leveraged bear funds. Since mid May, there have been 72 trading days. On 60 of those days or 83% of the time, investors have been positioned bullishly and with leverage to an excessive degree.

These investors clearly got Bernanke's message back in May. But something is wrong. The market hasn't gone anywhere, and a lot of investors are probably underwater over this time period. But don't worry, the cavalry will soon arrive - at least that seems to be the current thinking. Despite the current down draft - if you can call a 4% drop a down draft - there are still too many leveraged bulls. Which leads me to ask: with everyone all in, where are the bulls to BTFD?

The pullback that started 4 weeks ago is marginal in the scheme of things, but there is a lot of trouble under the surface. It would really be healthier if the market got whacked more than 10%. This would really turn the bulls into bears. At present, it seems investors are poorly positioned.

 


TacticalBeta offers a 21 day FREE TRIAL (no credit card required): 1 CLICK SIGN UP

 

Back to homepage

Leave a comment

Leave a comment