Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Market Will Follow the Money

By

Are Rydex sectors over- or under-invested compared to other sectors of the S&P?

PrintPRINT

Keys To This Week, one of 6 different reports produced for Asbury Research's subscribers, provides a bulleted list of key factors that are most likely to influence the direction of the US stock market and market sectors, US interest rates, and the US Dollar.



To construct this chart, I took the daily assets invested in the 18 RYDEX sector funds and then distributed them into one of the 9 select sector SPDR ETFs that they best pertain to. The end result is a proprietary investor sentiment indicator used to determine how over- or under-invested any one of these sectors are, relative to the other sectors of the S&P 500.

Here's the distribution of these "sector bet assets" as shown on the chart through the end of last week:

  • Materials: 30%
  • Technology: 23%
  • Energy: 14%
  • Consumer Discretionary: 12%
  • Health Care: 7%
  • Financials: 6%
  • Industrials: 3%
  • Consumer Staples: 3%
  • Utilities: 2%

The key to understanding this data, and to using it to identify investment opportunities, is context. I produce this context by comparing the current percentage of assets invested in each sector to: 1) end-of-quarter asset distributions going back to 1999 (when the select sector SPDRs began trading), and 2) to historic averages for each sector. This tells me whether the percentages that appear in the pie chart and on the bulleted list above are historically normal distributions, or if they represent over- or under-invested extremes.

This chart, and these data, also show where investor assets are moving from, and to. I've found that "following the money" via these data typically leads changes in broad market direction.

At 23% of all sector bet assets invested, the technology sector currently comprises its largest percentage of the pie since the second quarter of 2000.



In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.

< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE