Carl Swenlin: Rydex Cash Flow Ratio Overbought

Carl Swenlin: Rydex Cash Flow Ratio Overbought

by Carl Swenlin

Carl Swenlin

The Rydex Cash Flow Ratio gives an improved view of sentiment extremes by using cumulative cash flow (CCFL) into Rydex mutual funds rather than using the totals of assets in those funds (which we use for the Rydex Asset Ratio). It is calculated by dividing Money Market plus Bear Funds CCFL by Bull Funds plus Sector Funds CCFL. (For more detail click here.)

(This is a recent excerpt from the blog for Decision Point subscribers.)

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Currently, the Ratio is approaching extremes of its range that have often led to market tops. On the three-year chart below you can see where some Ratio tops are coincident with price tops, but there are other cases where Ratio tops precede price tops by weeks or even months. Since other sentiment indicators that we track have not yet reached bullish extremes, it will probably be weeks before the next price top; however, the current Ratio reading should be considered a yellow flag.

Rydex Cash Flow Ratio

Click to enlarge / view in new window.

For those interested in a closer analysis of cash flows and assets, we publish a daily report. Allow me to test the limits of your good nature by including a copy of it below. There are two sections, and the bottom section shows daily cash flows. Note by the totals at the bottom of each section that the large inflows began on Tuesday.

Rydex Tracker Daily Assets Report

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Technical analysis is a windsock, not a crystal ball.

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Carl Swenlin is a self-taught technical analyst, who has been involved in market analysis since 1981. A pioneer in the creation of online technical resources, he is president and founder of, a premier technical analysis website specializing in stock market timing, market indicators, charting, and focused research reports. Mr. Swenlin is a Member of the Market Technicians Association.