Monday's market action saw some of the strongest buying amongst the Rydex market timers in over 10 years. Oops!

Or to put it another way, I hope you were not one of those buying the market on Monday like the Rydex market timers. But if the Rydex asset data is any indication, it was likely that you were. Oops!!

The Rydex market timers represent a small segment of the investing world. Nonetheless, their actions remain a useful window into the mindset of investors. In addition, the Rydex asset data is sentiment data based upon real asset flows not an investor opinion poll. By tracking the money, we get to see how these investors are placing their market bets. Figure 1 is a daily chart of the SP Depository Receipts (symbol: SPY). The indicator in the lower panel looks at the ratio of the assets in the Rydex bullish and leveraged funds relative to the assets in the bearish and leveraged funds. Not only is this indicator useful to determine which direction investors are leaning, but we also get a sense of conviction to that bet because they are utilizing leverage.

Figure 1. SPY/ daily

After Monday, the value of the Rydex bullish and leveraged to bearish and leveraged ratio was 3.70. This was the highest value this ratio had since the rally began in March, 2009, and it was the highest value since 2001. As I stated in the comments to our Premium Content service:

"These market timers are so confident in their market outlook that they are expecting only one outcome," and I went on to pose the following question: "When have you known the market to ever be a sure thing?"

My brief but full comments from Monday evening's report are posted below.

Figure 2. My Comments

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You may access Monday evening's report at: Rydex Report for 5.3.11