2010-12-14

Market sentiment: Rydex Nasdaq 100 Bull/Bear Ratio At Highest Since Dot Com Collapse

This is a follow up to yesterday's post titled Market Sentiment: extreme bullishness still. ZeroHedge reports that Rydex Nasdaq 100 Bull/Bear Ratio At Highest Since Dot Com Collapse

Quoting SentimentTrader.com:
Traders in the Rydex mutual fund family have poured into the Nasdaq 100 long fund at the expense of the inverse fund on the same index. These traders now have 34 times more money invested in the long fund vs. the inverse fund, which is the highest ratio since the bubble days of 2000 and early 2001.
[...] a composite Bull / Bear Ratio for the S&P 500, Nasdaq 100 and DJIA [...] neared 3.0 on Thursday, meaning there's almost 3 times more assets in the long index funds than the inverse index funds. Since 2004, only two other times approached this level (late February 2004 and November/December 2004). Other times the ratio approached this level, stocks backed off in the month(s) ahead.
This is yet a truly amazing and unbelievable finding if you think just about the fundamentals. But you shouldn't be surprised if you've already realized that markets do not have anything to do with fundamentals but are driven only by sentiment.

It looks like we're getting the perfect setup for a major down leg, potentially worse than the 2008 panic.

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