Rydex

As long as the bulls continue to believe, the market should continue to push higher, but there will be limit.

The bulls have the ball in their court and are on the cusp of turning this recent price move into a multi-month barn burner.

There is a sense of incredulousness regarding the recent price action.

So while there are more bulls, they are chasing prices higher with one hand already on the eject button.

I am betting that we will see lower prices before higher as there are few bears (i.e., no short covering) and as the time for the bulls to have taken the reigns of this market have long since past.

Two consecutive down days in the equity markets must seem like Armageddon.

These are an interesting group of charts.

And for another confirmation that the Nasdaq is now at the same extreme "irrational exuberance" levels last seen during the dot com crash, we read courtesy of sentimenttrader.com that the Rydex Nasdaq 100 bull/bear ratio is now the highest it has been since just before the dot com crash. "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." And what is scarier, is that unlike during the dot com, investors are using leveraged methods to express their exuberance: "The Bull / Bear Ratio for the leveraged funds isn't quite as extreme...but it's close (on a relative basis)."

A very extensive look at investor sentiment.

While all of this is short term noise, it is absolutely amazing that there would be this much commitment to the market after a 60% plus run in the S&P500.

The Rydex market timer was buying yesterday's sell off.

Yesterday's mini sell off has brought out the dip buyers.