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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