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Rydex Breadth Indicator
Is Oversold February 10, 2010
-------------------------------------------------------------------------------------------------------------------- This is an abbreviated sample of a comment posted for subscribers --------------------------------------------------------------------------------------------------------------------
Yesterday we took a look at the distribution of assets among a group of Rydex sectors. What we saw was that with a few exceptions, assets in general were heading south.
We can see that clearly reflected in a breadth type of indicator we track for the Rydex funds, which looks at the percentage of sectors that have assets trading above the average level of the past 50 days. As of yesterday, that dropped to 15%.
Typically, oversold breadth measures like this work best in bull-market environments, but even during the tough stretch from 2007 - 2009, it worked pretty well when it reached this depth.
Over the past week, we've seen a couple of different studies suggesting we could be very close to a multi-day or multi-week bottom. Friday's meager reversal wasn't a great development, since it sucked a lot of the air out of that potential, but measures like this one argue that even if we're in the midst of a new downleg, we could have more of a recovery before it resumes. Home | Commentary | Indicators | Models | Sectors | COT | Subscribe | About Us
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