1. Window dressers happy times – well they made back 10% of equity value and so far we seem to repeat last years low once again. Some very conflicting and troubling for bears is that the Rydex ( Chart at the bottom) is at extreme bearish levels despite the rally and most sentiment indicators I track as well like the ISE moving averages (MAs) with yesterdays mind-boggling number of 56 (mostly due to a massive EEM put purchase).
That are aspects pointing rather to a low, a severe one despite we have already going up sharply. On top of that BAC ( Merril Lynch) says Hedge Funds are extremely short all together and trader positions (NYSE shorts and position commitments plus options data) confirm that.
As we are getting close to my wave 4 target area SPX 1220-40 it will be very interesting to see how that plays out as I get cautious on the downside potential. Usually sentiment numbers win it is not precise on a daily basis but overall shows where stocks are heading ( from a contrarion point of view, hence when the market is too bearish markets go up).
The monthly charts still produce a sell signal and initiates the bear market and the point is rather on the timing and from what level the next big selling wave will start. For now we have a support by sentiment and still a wave 5 to go down and we have risen in a classical way just around the death crosses occured like last summer.
Rydex Nova/Ursa Ratio
|Date||NAV Adjusted N/U Ratio|