Friday, August 13

So Thursday was a modest down day in the markets. How did traders react? Unfortunately, the $200 million man decided this was a good place to put some money in on the up side, so of course we went down some more. The market will need to get rid of him before we can go up. It could have gotten rid of him on Friday. We'll see on Monday.

I will mainly be focusing on two funds, the Xedyr (that's spelled backwards so a search engine won't find it hopefully) Nasdaq 100 x2 funds, regular and inverse, and the S&P 500 x2 funds, regular and inverse. By far the most important fund that I watch is the Nasdaq 100. I believe this gives a great long-term look at what's happening. And then the S&P 500 is interesting on a short-term basis. Watching the $200 million man is very instructive as to what's going on. He represents the common man, me, you. And the $200 million man mainly trades the S&P 500 x2 fund, regular and inverse.

The numbers for the past week for the Nasdaq 100:

Monday: 145.93 in the positive fund
65.51 in the negative fund

145.93 divided by 65.51 = 2.23

Tuesday: 153.48
68.41 = 2.24

Wednesday: 137.07
71.06 = 1.93

Thursday: 126.10
77.59 = 1.63

Friday: 122.14
76.88 = 1.59

So the Nasdaq 100 number is coming down to a more reasonable level, where we could go up again. Anything over 2.0 is getting pretty high. The highest numbers I've ever seen were at the highs last fall and then again early this year, where it got up to around 4.12 both times. The lowest I've seen was at the lows of March of last year, where this fund did finally go negative for a few days. So that's the range that I've seen. If I knew whether we were still going up on the bull market that started in March of last year or whether the highs earlier this year was it and we've started a major move down, I could tell you when we reach that low or high with these numbers. Unfortunately, I don't know whither we go from here. I'm leaning toward up, mainly based on the fact that we are uncannily tracing out the same pattern we did earlier in the year, and that earlier pattern led to a nice long rally, so I'm thinking this one could lead to even longer and stronger rally, although that could lead to the final high. But I certainly could be wrong.

The numbers for the S&P 500 for the past week:

Monday: 89.83
192.25 = 2.14

Tuesday: 240.23
190.91 = 1.26

(So the $200 million man jumps half in on the up side
on Tuesday. It's a mild down day. He jumps back out for Wednesday.)

Wednesday: 94.72
199.61 = 2.11

(A large down day. This surprises me, with the $200 million man not
still on the positive side. And that down side number is getting
shockingly large.)

Thursday: 83.81
213.10 = 2.54

(Wow, over 200 on the down side without the $200 million man
involved. Very, very negative. When I see the majority winning,
as they did on the down side on Wednesday and Thursday, I
have seen this as a sign that we're reaching a low in the past.
We'll see. Unfortunately, we have a problem on Friday.)

Friday: 210.82
210.72 = 1.00

(So even though things are very negative, the $200 million man
decided this was possibly a low and so he went in halfway on the
positive side. And it was a down day. As I said, he has to give
up this position before we can go up, I think. But that could be
Monday.)

To go up for a while, the market needs to keep that guy out of
the positive fund. It does that sometimes just by wearing him
out, to where he just goes to heck with it, I know we're reaching a
low here somewhere, but I'm just going to sit back for a while and
let it get started without me just to make sure.

Rob