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
Time to reverse long dollar positions 2018/11/13
Time to cover Euro short (for now) 2018/11/12
Bond and Yen fuel still healthier than equities and the Euro 2018/11/11
Buying bonds and the Yen vs the Euro ... 2018/11/08
Yen fuel jumps toward lofty levels with LT bond fuel 2018/11/07
Using trailing stops to protect against fading equity fuel. 2018/11/06
The weekly bond gauge is telling bond traders not to panic - especially since equity fuel is getting scarcer. 2018/11/05
Currency fuel rises -but not enough yet 2018/11/04
Yen fuel sinks again 2018/10/31
Yen fuel rises with the sell off but not enough for me 2018/10/30
The $ still looks safe. 2018/10/29
Time to re-short the Euro? 2018/10/28
Euro fuel is still very low and equities hit a new PTW. 2018/10/25
FX and bond traders - Are you happy?! 2018/10/24
Equity fuel is high but bonds are burning it. 2018/10/23
Euro fuel remains very low. 2018/10/22
Bond fuel creeps higher 2018/10/21
The Euro gauge almost hits the floor 2018/10/18
Time to cover bonds or Euro's? 2018/10/17
That equity rally didn't cost us too much equity fuel. 2018/10/16
Time to buy the Yen vs the Euro? 2018/10/15
Equities are still hot (with stops please) 2018/10/14
Weekly bond fuel crashes out (again) 2018/10/11
Equity fuel is high but stops are required. 2018/10/10
Bond fuel creeps higher. 2018/10/09
S&P fuel hits the ceiling while Euro fuel sits on the floor 2018/10/08
Equity fuel remains strong 2018/10/07
The equity is very positive (but the markt feels very sick) 2018/10/04
Get long the dollar, somehow 2018/10/03
The dollar looks very healthy 2018/10/02
Euro fuel takes a hit but is the Yen a better short? 2018/10/01
No big changes in the gauges 2018/09/30
S&P fuel rises even more. 2018/09/26
Bond and Yen fuel are running desperately low. 2018/09/25
The weekly bond fuel tank sprung a huge leak. 2018/09/24
We have a new performance of the fuel gauges. 2018/09/20
The equity tank is losing fuel due to higher yields. 2018/09/19
Equity fuel hangs in. 2018/09/18
The Yen gauge flips up 2018/09/17
Yen fuel remains very low. 2018/09/13
Currency gauges have little fuel. 2018/09/12
Yen fuel recovers but not enough to cover. 2018/09/11
Use the Yen as your short position 2018/09/10
Friday was ugly but it didn't change much. 2018/09/09
Getting long- lots to pick from. 2018/09/06
The daily bond gauge creeps into bullish territory. 2018/09/05
No Big Changes 2018/09/03
The weekly bond fuel tank sprang a leak. 2018/08/30
Equity fuel holds steady even though Vix takes another hit. 2018/08/29
Euro fuel takes a hit. 2018/08/28
Fuel tanks drain a little but not enough to change positions. 2018/08/27
Equity and Euro fuel hold steady. 2018/08/26
Stock market and currency fuel are very solidly bullish. 2018/08/23
Euro fuel holds steady in spite of big price rise. 2018/08/21
Rate declines boost currency fuel. 2018/08/20
The euro tank has a bad leak. 2018/08/19
S&P gauge backs off but it's still very healthy. 2018/08/16
Turkey creates a "Trauma Event"! 2018/08/15
Yen fuel recovers. 2018/08/14
Yen fuel plunges. 2018/08/13
The Yen gauge sinks back to neutral. 2018/08/12
The Yen's out-performance cost it some fuel. 2018/08/09
Risk Parity fuel bounces back. 2018/08/08
No great changes, the Yen gauge is still solid. 2018/08/07
Lightening longs in Risk Parity 2018/08/06
Yen and bond fuel rise together. 2018/08/05
RP fuel is still far better than either stocks or bonds. 2018/08/02
Bund weakness is holding up the Euro Gauge. 2018/08/01
The Euro gauge holds its ground but the Yen gauge .... 2018/07/31
Bond fuel sags but currency fuel rebounds (again). 2018/07/30
The Yen and the RP gauges snap back. 2018/07/29
This Yen fuel tank is almost dry. 2018/07/27
Tariffs are over so should we buy the Euro? 2018/07/25
Today's Bond volatility spike crushed RP and Euro fuel. 2018/07/23
A violent day in FX but no great changes in the gauges. 2018/07/22
Currency fuel gauges recover with rate declines. 2018/07/19
Bond and Yen Fuel Running Low 2018/07/18
A tough day in currencies. 2018/07/17
The Euro gauge takes off... 2018/07/16
Reversing Our Short Position in the Euro 2018/07/15
Are you enjoying the ride down in the Yen? 2018/07/12
The Yen gauge gets hit even more. 2018/07/11
Equity fuel leaks a little more. 2018/07/10
The fuel tanks spring leaks. 2018/07/09
The gauges are all rather happy. 2018/07/08
Buying Yen tonight 2018/07/05
july 4 2018/07/04
Sticking with Commodity Currencies 2018/07/03
Time to consider (buying) the commodity currencies? 2018/07/01
Bond fuel remains steady. 2018/06/29
The bond gauge hangs in and the equity gauge goes nowhere - for now. 2018/06/27
The equity gauge creeps higher. 2018/06/26
The bond gauges remain healthy 2018/06/25
Bonds fuel is plentiful compared to equities. 2018/06/21
The Euro gauge takes a hit while the Yen gauge rises nicely. 2018/06/20
The currency gauges fade. 2018/06/19
And now with our new Yen gauge ... 2018/06/18
Bond fuel rises with the market 2018/06/14
Euro fuel declines but no reason to panic. 2018/06/13
No major moves in the gauges 2018/06/12

Analysts

  • Chris Evans

    Analyst Years of Experience: 30
Chris Evans

Time to reverse long dollar positions

Paratrade Systems Premium Report

Chris Evans

Time to cover Euro short (for now)

Paratrade Systems Premium Report

Chris Evans

Bond and Yen fuel still healthier than equities and the Euro

Paratrade Systems Premium Report

Chris Evans

Buying bonds and the Yen vs the Euro ...

Paratrade Systems Premium Report

Chris Evans

Yen fuel jumps toward lofty levels with LT bond fuel

Paratrade Systems Premium Report

Chris Evans

Time to reverse long dollar positions

Paratrade Systems Premium Report

Chris Evans

Time to cover Euro short (for now)

Paratrade Systems Premium Report

Chris Evans

Bond and Yen fuel still healthier than equities and the Euro

Paratrade Systems Premium Report

Chris Evans

Buying bonds and the Yen vs the Euro ...

Paratrade Systems Premium Report

Chris Evans

Yen fuel jumps toward lofty levels with LT bond fuel

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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