11 replies to this topic

[Darris]

The Rydex Dynamic Flipper was basically 100% wrong for what seemed to be months this trading year, but now they have two big Wins in the last two trading days. For Monday trade, they have done a complete Flip again, and are now short. However, the futures NQ contract put in a little premium by the 4:15pm close, so they are a bit underwater going into the weekend assuming the trade is marked to market at the 4pm cash close. In summary, this will be an interesting trade since they are due for the Hot Streak to continue, but it is in direct conflict with the positive OPEX seasonal, which should last for at least 2 more trading days (Mon and Tues). The OPEX cycle suggests the best times to speculate short are at the Tues close or 10am on Wed. Game on!! PS. Two typical scenarios that sometimes indicate the outcome are: If we trade down early in the day, Flipper will probably be wrong, as we will probably rally into the close, but if we trade up early they have a better chance of turning the intraday loss into a win at the close. My theory is, if Flipper places a bet, they plan on trading in that direction with other funds managed during the regular trading day, so if they expend all their additional fuel early, the market will reverse against them. FWIW.

[peregrine]

Hello Darris, I'm interested to know if you have been fading this guy....since he's been wrong for a while? Would appreciate a link if you have one to share. Thanks. P

[arbman]

The index premium P/C ratio is at 0.57 vs equity at 0.63. The dollar traded amounts are heavily on the call side, what an upside potential into the OPEX? If Monday sells hard, as it should out of this apparent a-b-c decline, then a bottom around Wed morning is what I would expect and a rally hard of off the 10 wk low into the expirations is the best scenario since the larger cycle is still dominating here, imho...

The Wed's high option volume with the bearish P/C was around 3.9M, the option volume fell to 3.6M on Thu despite the decline, although the P/C was kind of bullish --so I don't think it was enough hedging, then came the lower volume rally with 3.2M contracts on Fri and A/D closed at the extreme right below the gap resistance with yet neutral P/C ratio. I don't think the downside work is done...

Edited by kisacik, 12 May 2007 - 11:41 AM.

[Darris]

peregrine,

I am more of a futures day trader, so I do not particularly fade him with a "position trade", but what I have been successful in doing, is playing the last hour of trade in anticipation the bet will be taken off the table. IMO, Rydex Flippers stopped position trading in Sept 2006. Most of the big bets since that time have been taken off the table within 1-3 days.

In the second set of data at this DP link, it shows the net cash flow change for each fund, and I just simply look for bets greater than $50 million in the NDX fund, and closer to $20 million in the other Dynamic Funds.
http://www.decisionp...ydexassets.html

Since I am generally bullish, with the uptrend so strong, I will bias my "fade" more heavily to a strong upside close when the Rydex Flipper is short going into the last hour of trade IF we are down a bit or have been down during the day, so for Monday if we consolidate Friday's late afternoon rally, and we are flat to down before the last hour of trade, my bias would be to go long the NQ futures. If we are getting crushed to the downside and are close to Thursday's closing low, I would not try to go long until the last few minutes of trade going into the 4pm close, and then it would probably only be good for a couple of points. Another scenario I would be watching for would be like Friday's price action. Strong rally early, mild consolidation, then strong finish into the close, as the market would force the Flipper out of his position, and one could start anticipating a rally a little earlier, say around 2-2:30pm. I think I recall that you monitor the MCOs intraday and the TICK, so if these indicators are strong during any mid-day consolidation, that would be a clue to press the long side. OPEX has a strong upside bias for the next 2 trading days, since the pattern of putting in a low on Wed/Thurs the week before expiry occurred AGAIN!!!!

Rydex bets are very small in the big scheme of things, but it still amazes me how the study of the data can often times identify clues that, over time, become repeatable.

Have a great weekend, and thanks for your post, as you are a valued contributor here and at TW.

[peregrine]

My read of the breadth data indicates that Monday could be what I call a transition day, i.e., a day that may be a mild net positive for price...but in which net breadth is less than Friday. Alternatively, Monday could be a day where both price and breadth suffer comparitively to Friday's data. In sum, I'm not looking for another range day up...but rather a test of the Thursday low by the 5/16-17 time frame. If you are correct that the OPEX cycle will levitate prices for the next 2 days, then Wed. and Thurs. will seem increasingly vulnerable. As a general view, I see that the daily MCO has a consistently bearish pattern of tops beneath tops, and the Summation indexes for both the NY and NAZ have turned down from Resistance...with the added risk that the NASI is poised to break below its zero line. This is telling me that long side forays should focus on the Dow, while the short side concentrates on the RUT or NDX. While I do trade index ETFs...I do also trade Rydex vst....which engendered my question about the Rydex Flipper. I'm still not certain if he/she is a blogger or paid service...and while my style is not to fade anyone...I always like to discern the thought process of my competitors. Do you have a link for Rydex Flipper? I cannot Google that URL. Thanks. P

Edited by peregrine, 12 May 2007 - 07:50 PM.

[Darris]

peregrine,

I may have mis-understood the question about "Rydex Flipper", as it is just a nickname myself and others have used to describe Rydex Net Cash Flow changes.

The URL I gave is a direct link to Decision Point where the daily Asset and Net Cash flow changes for each Rydex mutual fund is tracked. It is a subscription based service, and costs $20 per month. I cut and pasted the table headers below. I may have assumed you were a subscriber, but if not, I think you can contact Rydex directly and they will send you a spread sheet each day with the same info. I do not know how to request that file from them since I do not have an account with them, but I know Mark Young gets it from them.

Thanks for you excellent commentary, as I certainly agree with your assessment. My comments about the OPEX "over ride", if you want to call it that, is that it is pure and simple manipulation by the boyz that have the clout to push the market what ever way they are positioned for. I fully recognize that this is a conspiracy like theory and no way to prove it, but I have seen it occur far too often. Last month from the Wed/Thurs a week before expiry to the Friday expiration day, the ES futures contract was up 50 pts. During the time frame where the boyz create the OPEX "discount" like Thursday this past week, they also create residual "doubt". This comes in the form of a consolidation day after the 1st rally day, which Monday could be, or they just continue to power the thing straight up, leaving a lot standing at the station wondering why the train left without them. You may have read a guy that calls himself "LG" over at Investors Hub, or many years ago seen him on Silicon Investor, but he was the guy that coined the phrase "think like a criminal", so that sort of sums up all the things going thru my mind during the two week OPEX cycle.

Good Trading!

http://www.decisionpoint.com/


DECISION POINT
RYDEX TRACKER DAILY ASSETS REPORT
Friday 5/11/2007

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The Decision Point RYDEX Tracker is a daily publication specializing in
the 57 Rydex mutual funds. It provides momentum analysis, strength
ranking, BUY and SELL Signals, and theoretical portfolio tracking.
Because Rydex does not report assets until after our normal publication
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is updated. THIS MAY BE AS LATE AS THE NEXT BUSINESS DAY.
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TOTAL ASSETS (In $ Millions):

Name Symbol 05/11 05/10 05/09 05/08 05/07 05/04
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NET CASH FLOW (In $ Millions): Cash in/out after allowance for NAV change.

Name Symbol 05/11 05/10 05/09 05/08 05/07 05/04
------------------ ------ ------- ------- ------- ------- -------


DEFINITIONS: For thorough discussion of Rydex Ratios and and associated terms
click here.

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CAVEAT

We make every effort to insure the accuracy of this information, but we
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End of RYDEX Tracker Daily ASSETS Report for Friday 5/11/2007

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[mbradley]

Having watched the Rydex fund levels daily for several years, I will add a couple of points. First, the flipper does exist. They trade about 50-100 millions dollars. Second, they tend to be counter traders - shorting after strong up days, and buying after big weak days. Hard to read much more than that into it. Best, Mike

[peregrine]

peregrine, I may have mis-understood the question about "Rydex Flipper", as it is just a nickname myself and others have used to describe Rydex Net Cash Flow changes. Ahhhh so.....Thanks. I have not been hanging out at TT for some time until recently....and was unfamiliar with the nomenclature.

[slatedrake]

Zen aka jerkstore over at technicalwatch.com wrote about "Flipper" (a nickname I believe he coined) on his old blog...

[johngeorge]

Mysterious Rydex flipper exposed.