Double Bottom In Mutual Fund Cash Ratio? Prechter Thinks Optimism Signals Top and Bond Market Biggest Bubble In The History Of The World (Video)

Robert Prechter of Elliot Wave International (see below) is back trying to kill everybody's buzz, lol.  He was featured on Tech Ticker on 2/24/2010.  He's still bearish and probably one of the biggest contrarians on the market right now.  He mentioned that mutual funds have a 3.6% cash/assets level which he considers "an incredibly dangerous level indicating extreme optimism among mutual funds and their clients" and "low cash levels tend to coincide with tops".  So will the mutual fund cash ratio double bottom here at 3.6% (3.4% in 2007) or will the cash ratio squeeze to 3.2% before a volatile event forces re-balancing.  That's yet to be seen, but he always makes interesting points.  In the interview he provided a chart comparing the mutual fund cash-to-assets percentage to the market.  It's interesting that he also thinks the "bond market is the biggest bubble in the history of the world".  So he said stay in cash inside safe institutions or in Treasury Bills (shortest duration).  I'm going to chart out $SPX and SPY on long and short term time frames next.  The long term trend is the most interesting and at an inflection point..




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Comments

  1. Prechter sees a signal for a top everytime he has indigestion.

    No no, it's my fault for practicing poor money-management and having a purely directional bias, I learned my lesson, he's still good to listen to. The telling thing is that EWI doesn't do triple digits trading eminis on every wave C and 3, I mean if they were really as good as they claim they wouldn't need your money. Maybe I'm fucking up your affiliate sales here...

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  2. If you want to see how elliot wave can be incorporated into more consistent directional trading, check out NeoWave, that guy really gets it I think. All the bloggers posting wave counts that P3 is just around the corner are perpetually re-rigging the near-future, it's looney.

    Speaking of the looney, USD/CAD holding support above the 24-hr average, could be a wave 4 of 1 of LOL.

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  3. Nice descending triangle or wedge on USD/CAD, doubled bottomed now attempting a triple bottom! Oh my! A break will probably will coincide with an oil move here or vice versa. Should be a nice move.
    http://www.flickr.com/photos/dvolatility/4426449346/

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  4. Would be good to see a post doing a correlation study to see if CAD has a robust history of being the "tell" for the DX.

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  5. Good call, I need to make a note to do that. First there's too much going on with Lehman and Citi today, nice double on $C MAR 4s, you see that?

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  6. No but that sounds like something I might be interested in.

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  7. USD/CAD appears to be piercing the lows while USO breaks through that rising wedge..

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  8. Yeah I'm flat, down 4% for the year and going long Social Game Mind Control while my funds transfer, the visual format for my blog is going to change once I start doing options. Leveaged trading with linear instruments requires attention to non-comf signals and is too stressful for someone with a full-time job. Also having a bearish bias doesn't help.

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