Figure 1.

Rydex Bullish and Leveraged to Bearish and Leveraged/ daily

1) The ratio of Bullish and Leveraged to Bearish and Leveraged: 1.99

2) Values <=1 (below blue line) means more bears than bulls and typically this is
bullish for prices

3) Values >=2 (above red line) means more bulls than bears and typically, this is
bearish for prices
Figure 2. Rydex Money Market Fund/ daily

1) High indicator value suggests fear as investors are seeking the safety of the
money market fund; this is bullish for higher prices

2) Low indicator value suggests complacency as investors are fully invested; this is
bearish for higher prices

3) The trading bands are set to identify values that are 2 standard deviations above
normal over the past 40 trading days
Figure 3. Rydex Relative and Absolute Combination Indicator/ daily

1) When the indicator is green
bullish for higher prices

2) When the indicator is red
bearish for higher prices

3) The indicator uses the total amount of assets in all bullish funds and the total
amount of assets in all bearish funds; the indicator looks for both relative and
absolute extremes in the data
Figure 4. Rydex Combo Indicator/ daily

1) Figure 4 is a composite indicator constructed from figures 1 -3.

Figure 5a. $VIX/ daily

Figure 5b. $VXN/ daily

Figure 6. Rydex Total Bull v. Total Bear/ weekly

1) The indicator uses the total amount of assets in all bullish funds and the total
amount of assets in all bearish funds

2) The indicator attempts to identify multi – week swings

3) When the indicator is green, Rydex investors are bearish and there are more
assets in bearish oriented funds than bullish oriented funds; in general, this is
bullish for higher prices

4) When the indicator crosses above the signal line, prices tend to move higher

5) Indicator values >=58% lead to intermediate term tops

Figure 7. Rydex Buying Power/ weekly

1) This indicator is constructed from all the assets in the Rydex Money Market Fund
and from the total amount of assets in all bullish funds plus the total amount of
assets in the bearish. Essentially, this is a combination of our two buying power
indicators: my old version and the TradeKing version.

2) The purpose of the indicator is to assess the amount of money or buying power on
the sidelines

3) High buying power
bullish signal

4) Low buying power
bearish signal

My Comments

1) Essentially, the Rydex market timers are all in

2) Figure 1: the ratio of leveraged bulls to leveraged bears is 1.99 and the highest this
ratio has been for this entire rally

3) Values greater than 2 are associated with a market top

4) Figure 2: the amount of assets in the Rydex money market are extremely low and
they are the lowest since the April, 2010 top

5) Figure3 is near a sell signal

6) Figure 4 is bearish

7) Figure 6 is > 58%

8) I will present the data later in the week, but essentially when this indicator gets
above 58% the top is usually within 4% on the SPY

9) Figure 7 shows that there is little firepower on the sidelines

10) The short term trend remains up and prices can be trailed with the simple 10 day
moving average

11) However, we are starting to see some real extremes in the Rydex data

12) Although I mentioned the potential for a bullish signal in yesterday’s report, it
would seem that within the context of the Rydex data the upside is rather limited

13) Pullbacks and low risk buying opportunities do occur within the context of a very
bullish run if this turns out to be one of those opportunities, so it still pays to be
patient

14) Bottom line: I would not be a buyer tomorrow!!!