Weekend August 3, 2024
Clearly my guess that Friday would be an up day was wrong, this is the power of a third wave down. Note the link to the list of Rydex Inverse Funds below. Again the surprises will be to the down side. Stock prices fall seven times as fast as they rise.
Recall the risk on risk off ratio chart of the NASD 100 or NDX to the DJ Utility Average. NDX is risk on in tech stocks, while utilities are regarded as safe, dividend plays. Here are the significant tops since the dot.com mania.
The dot.com high was 16, the pre covid high was 18, and July 11 was 23. this ratio in the 1980s was 1!
Here is an up close view of what has happened.
Since July 11 a waterfall decline has occurred. In a bear market all surprises are to the downside. The WSJ reports that the NDX is in correction territory, gee it only took less than three weeks for the NDX to drop 10%. Correction territory would be correct if the time frame is this year. If the time frame is since 1982, this is the top or tops.
Many self directed retirement plans are limited to mutual funds. Handily Rydex has created multiple ways to profit from a bear market with its inverse funds. The Morningstar list of all RYdex funds is
https://www.morningstar.com/asset-management-companies/rydex-BN000009W5/funds
The extensive list of inverse funds start on pages 3 & 4. Here is RYARX the inverse S & P fund.
The potential for gain is great. RYARX TRADED AT 350 at the bottom of the sub porime crash when the S &P dipped below 1,000. Near one thinks we will see that level any time soon but in fact it is liable to happen in the next two to three years.
Inverse funds - see Rydex Inverse Funds list above starting page 3 & 4
General HEDGE HDEGE
NASD PSQ
SPX SH
DJIA DOG
Silver
From the late May high, an ABC fourth wave now appears complete. Silver should soon take out the May $32.50 high
Bonds
The 3 month T Bill rate has fallen to 5.03%. That makes it a half point difference from the 5.5% Fed Funds Over Night rate. Deciding not to raise rates now means they will be playing catch up or is it catch down in their Sept meeting.
Tom McClellan always has an interesting take on things. A week ago his sunspot indicator saw higher unemployment, it is already happening.
Crude oil remains frustrating dropping $2.79 on Friday. For a bullishforecast to remain in tact this needs to be a low at $73.52,
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