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Following is my reply to a friend who was noting a 29% single day increase in
the assets in Rydex Arktos fund (bear market bet on NASDAQ). Thought this
would be of interest to those focused on sentiment or market psychology. Good
day.
Regards, JIM Pilliod
***********************
Hi ,... While you are correct in noting a 29% increase in Arktos assets,...it
is important to realize that IT IS ONLY BECAUSE ARKTOS ASSETS WERE AT SUCH A
DEPRESSED LEVEL (i.e. 9.28 Mill on 07-17, and 92.1 Mill on 07-18,...UNDER
$100 MILL IS NOTEWORTHY),...that a one day inflow sould boost the assets by
29%. For instance,...with over $3 Billion in OTC fund,..it would be
virtually impossible to have a 29% single day inflow of assets into OTC
fund,..there almost aren't enough total assets with Rydex to do that.
IMPORTANTLY,..the ratio of assets in OTC fund divided by assets in Arktos
fund,...AS OF 07-13 AND 07-14 WAS REFLECTING THE "MOST OVERBELIEVED LEVEL OF
OPTIMISM SO FAR FOR YEAR 2000. Assets in Millions:
2000 OTC assets Arktos assets RATIO OTC/Arktos
01-07 2,849.7 121.3 23.49
01-10 3,125.4 106.6 30.17
03-09 3,969.8 107.8 36.82
03-10 3,947.1 112.9 34.96
04-07 3,667.8 110.8 33.10
04-10 3,267.8 160.2 20.40
07-13 3,503.2 85.1 41.16
07-14 3,388.3 81.3 41.67
Why these particular dates in Jan, March and April?.....note on a daily
chart,...these dates ALL marked intermediate term highs,...from which we
headed lower. The ratio of assets in OTC/ Arktos is a coincident indicator
of sentiment for that point in time,..and is not hypothetical...it is
"real",..traders are voting with their feet,..it is what they are actually
doing with their funds,..not merely what they are thinking.
Bottomline,...some thoughts:
1. The OTC/Arktos as well as Nova/Ursa ratio of assets is worth tracking
(anyone with charting package interested in creating daily file and ploting
these ratios so they could be graphically posted on a web-page,..etc. ?) on
a daily basis,..as it has marked key turns of importance.
2. When everyone is on the same side of the boat,..we all know what can
happen.
Be Careful. Regards, JIM P.
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