Wednesday, August 8, 2007

Rydex S&P

Rydex S&PSocialTwist Tell-a-Friend
Tim Ord

The following chart is the Cash flow ratio for the Rydex S&P. Since early 2003 bottoms have formed on the SPX when this ratio reached 1.10. Yesterday’s close came in at 1.11 and in bullish territory.

The next chart is the Trin 5 dating back for three years. The Trin or sometimes called ARMS index is the ratio of advancing issues divided by advancing volume then this ratio is divided by declining issues divided by declining volume. The Trin 5 is the closing Trin added up for five days. When the Trin 5 reaches past 7.5 the market is near an intermediate term low. We have marked on the chart with red arrows going back for three years when the Trin 5 reached 7.5 or higher. You can see the Trin 5 has a good history of picking out intermediate term lows. The Trin 5 closed yesterday at 8.18 and implies the NYSE is near or at a bottom now.

The next chart is the NYSE going back for three years with its McClellan Oscillator and Summation index. When McClellan Summation index reaches below -500 it implies the NYSE is very oversold and near an intermediate term low. We have marked on the Summation index with a red arrow when the Summation index reached the bullish -500 range. Once the Summation index turns up from below -500, it implies the NYSE has seen its low. The Summation index has not turned up yet but is in an area where bottom form.

The market is at an important junction and is about ready to start an intermediate term advance. We are long the SPX on 8/2/07 at 1472.20.

Editor's Note: watch for Tim Ord's upcoming book, "The Secret Science of Price and Volume", to be published by John Wiley & Sons, in February 2008.

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