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Rydex Market Timers: A One Day Event

For Wednesday's FOMC announcement, the Rydex market timers were betting heavy that Bernanke and company would deliver. The Fed didn't disappoint as they continue to keep their foot on the easy money pedal. Unfortunately, the market did its best to frustrate the most, and the early morning rally fizzled intraday. The Rydex market timers have moved back to the sidelines.

The bullish and leveraged assets are now 1.77 times greater than the bearish and leveraged assets. The amount of assets in the Rydex Money Market Fund are in the middle of the past month's range. All this suggests that the Rydex markets timers were in the market briefly betting on higher prices as result of the Fed announcement. The Fed delivered; the market didn't. The Rydex market timers, like market participants throughout this rally, showed little conviction and moved back to the sidelines.

Figure 1 is a daily chart of the S&P500 with the amount of assets in the Rydex bullish and leveraged funds versus the amount of assets in the leveraged and bearish funds. This data is hidden, but the ratio of bull to bear ratio is depicted by the indicator in the middle panel. Once again, the maroon vertical lines highlight those times when the ratio was 2 to 1. The amount of assets in the Rydex Money Market Fund is shown in the lower panel. (The chart is a bit messy but one of the readers wanted to see all this data on a single chart - no problem.)

Figure 1. S&P500/ Rydex Assets/ daily

 

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