Paratrade Systems

Gauging Fear to Fuel Superior Returns

We measure the key variables that have historically sparked good returns in stocks and bonds. Once we know where they stand we can skew risk/reward in our favor.

There are only a few things we need to know to determine when there is good money to be made in stocks and bonds:

  • In stocks we measure how scared people are and whether interest rates are rising or falling. There may be other factors involved in a long term trend but these two factors are the keys to significant positive returns.
  • For bonds, we must measure inflation and economic growth. If the former is benign and/or the latter is weak, we can expect good returns.

It’s that simple. Paratrade’s fuel gauges boil these factors down to two simple indices for each market – one is daily and the other is weekly. There are also two such gauges for the “risk parity” position where you are long both stocks and bonds.

We can study the historical performance of the market when the fuel gauges are at varying levels. The table at my site shows filtered S&P and bond returns for different ranges of the indices. There is a clear skew.  

By subscribing to Paratrade’s daily commentary, you will receive an update about where these indices stand. Can you afford not to know?


Coverage

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Title Date
Yen fuel tank gets a refill 2019/06/10
The Euro tank is empty 2019/06/09
Th Euro tank is empty. 2019/06/06
Equities finally use some of their fuel. 2019/06/04
Still prefer bonds over the Yen 2019/06/03
Bonds have more fuel than the Yen. 2019/06/02
The equity gauge is suggesting we should take stocks for a run. 2019/05/30
Bond fuel weakens and Yen fuel dials back to empty. 2019/05/29
Bond traders - you should be very happy if you followed the bond gauge. 2019/05/28
The Euro tank is almost empty. 2019/05/27
Fuel is high in every tank (?) 2019/05/23
Healthy bond fuel (for a change) is helping Risk Parity. 2019/05/22
Equity fuel remains high and bond fuel is OK too. 2019/05/21
Yen fuel rises nicely but not Euro fuel. 2019/05/20
Currency fuel remains low. 2019/05/19
Euro fuel suggest no great bounce in store. 2019/05/16
Yen fuel rises but still very low. 2019/05/15
Bond fuel takes a hit. 2019/05/14
Stops hit as price diverges from fuel level. 2019/05/13
Equities have lots of fuel but it's not helping. 2019/05/12
The Yen tank is almost dry. 2019/05/09
Equity fuels hits the ceiling. 2019/05/08
Fading the Yen 2019/05/07
The S&P tank and the Euro tanks get refills 2019/05/06
The equity gauge gets hit hard. 2019/05/02
Reversal days everywhere but only Euro fuel is affected 2019/05/01
The euro has lots of fuel but can it finally respond? 2019/04/29
Bond fuel gets hit. 2019/04/28
The Yen tank remains healthy 2019/04/25
The Euro tank gets filled up 2019/04/22
Bond fuel is weak but Risk Parity is still happy. 2019/04/18
Euro fuel creeps higher 2019/04/17
Tightening S&P stops... 2019/04/16
Our equity tank is aging. 2019/04/15
The Yen as insurance for long S&P's 2019/04/14
Shall we add to the Yen? 2019/04/11
Equity fuel is resilient. 2019/04/10
Yen fuel hits the ceiling. 2019/04/09
Yen fuel gets a boost but not the Euro 2019/04/08
The equity tank is almost full (again). 2019/04/07
Euro fuel still very low - fits with low bond fuel 2019/04/04
Equity fuel is resilient; Euro fuel is not. 2019/04/03
The Euro tank is almost all out of gas. 2019/04/02
Bonds lose even more fuel, equities - not so much 2019/04/01
Euro fuel is low even though the market is very oversold. 2019/03/31
The Yen tank gets a refill. 2019/03/28
Bond fuel inches higher 2019/03/26
Yen fuel crashes 2019/03/24
Equity fuel rises in spite of rally. 2019/03/21
Currency fuel remains high. 2019/03/20
Yen fuel hits the ceiling. 2019/03/19
Bond fuel drops below 50. 2019/03/18
Currency fuel rises substantially. 2019/03/17
A nice rally that cost little fuel. 2019/03/13
Equity fuel rebounds 2019/03/12
It was a great rally but it spent a lot of fuel. 2019/03/11
Equity market fuel creeps even higher. 2019/03/10
The equity gauge gets a big boost 2019/03/07
Today's equity decline didn't add any fuel. 2019/03/06
The euro is down but the gauge is still optimistic. 2019/03/05
Euro fuel, still very bullish 2019/03/04
Yen fuel dwindles but Euro fuel stays healthy 2019/03/03
Tough days for Risk Parity 2019/02/28
Still Dollar Bearish 2019/02/27
Dollar weakness on the horizon... 2019/02/26
Buy bonds as a short equity substitute. 2019/02/25
Equity fuel running very low - we need a bond rally. 2019/02/21
Equity fuel continues to get low. 2019/02/20
Equity fuel wilts. 2019/02/19
Getting out of bonds .... 2019/02/18
Bonds still look better than stocks 2019/02/14
The equity gauge isn't quite bearish but ... 2019/02/13
The government is back at work but the gauges are not impressed. 2019/02/12
Fuel leakage almost everywhere... 2019/02/06
Equity fuel is neutral butt eh market is vey happy. 2019/02/05
S&P gauge is very sticky here just above 50 but beware of bonds 2019/02/04
Fuel Gauge Update in our new format (comments?) 2019/02/03
Are you printing money in RP like Ray Dalio? (You should be) 2019/01/31
No big changes in the gauges 2019/01/29
Bond fuel continues to slide. 2019/01/28
Bond fuel slides ... 2019/01/27
Tonight's Fuel Gauge Update 2019/01/24
Euro fuel reverses and bond fuel is getting perky 2019/01/23
Stops are hit and profits taken 2019/01/22
Only the Yen gauge budges. 2019/01/21
Yen fuel drains away in spite of weak price behavior. 2019/01/20
Bond fuel continues to leak 2019/01/17
Time to hide in Risk Parity? 2019/01/15
Equity fuel fading but still above critical buy level. 2019/01/08
Equity fuel finally cracks. 2019/01/07
Euro fuel rises dramatically. 2019/01/03
Currency Gauges Working Well 2019/01/02
Lots of fuel for bullish seasonals. 2018/12/28
Still Selling Euro's Into Strength 2018/12/27
Equity fuel is high but there's no hurry 2018/12/23
I hope you followed the currency gauge forecast - now what? 2018/12/21
Yen looks ike a better risk-off position than bonds 2018/12/18
Equities should do better 2018/12/16
Equity tank is full even though the government may go on holiday 2018/12/13
Euro fuel stays intact 2018/12/12

Analysts

  • Chris Evans

    Analyst Years of Experience: 30
Chris Evans

Yen fuel tank gets a refill

Paratrade Systems Premium Report

Chris Evans

The Euro tank is empty

Paratrade Systems Premium Report

Chris Evans

Th Euro tank is empty.

Paratrade Systems Premium Report

Chris Evans

Equities finally use some of their fuel.

Paratrade Systems Premium Report

Chris Evans

Still prefer bonds over the Yen

Paratrade Systems Premium Report

Chris Evans

Yen fuel tank gets a refill

Paratrade Systems Premium Report

Chris Evans

The Euro tank is empty

Paratrade Systems Premium Report

Chris Evans

Th Euro tank is empty.

Paratrade Systems Premium Report

Chris Evans

Equities finally use some of their fuel.

Paratrade Systems Premium Report

Chris Evans

Still prefer bonds over the Yen

Paratrade Systems Premium Report

Chris Evans

WHY IS THE LONG TERM BOND GAUGE UNHAPPY?

​Of late we have seen a very attractive set of conditions for bonds, as reflected in the daily gauge. The weekly index however has been drifting lower primarily due to the influence of utility stocks which are included only in the longer term index.

Chris Evans

Volatility Liftoff

​After months of dull sideways movement, we finally got a breakout in volatility (Vix). It came as it usually does by virtue of a decline in S&P futures. There are a number of questions to consider: 1.Should we wait a day or two? 2.is it big enough to justify buying S&P 500 (futures)? 3.Is it better to buy after a sustained period of monotony?

Market Fuel Gauge Update

​There is plenty of fear out there - which is a very good thing if you have some cash.

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