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
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
Equity fuel is very low but the market is impervious. 2018/06/11
The Euro fuel tank is almost full! 2018/06/10
The Euro gauge rises to very bullish levels. 2018/06/07
The weekly gauges are healthier than the dailies 2018/06/05
Equity fuel gets hit hard 2018/06/04
Equities need bonds to hold it together 2018/05/31
The weekly equity tank gets filled up but the daily is still very low. 2018/05/29
Bond fuel recovers. 2018/05/28
Utilities come to life! 2018/05/24
Today's bond rally will help raise equity fuel - eventually. 2018/05/23
No big changes 2018/05/22
Equity fuel is low but trade fears may be slow to dissipate. 2018/05/21
Trade news may help but it shouldn't last. 2018/05/20
Not much good news here for long only traders. 2018/05/17
The daily equity gauge hits a new low. 2018/05/16
The risk parity gauge springs a leak. 2018/05/15
The weekly bond gauge gets hit again. 2018/05/14
No big changes 2018/05/13
That (equity) rally didn't use up much fuel. 2018/05/11
Bond fuel is in very short supply. 2018/05/09
Bond fuel takes a big hit. 2018/05/08
The (daily) equity gauge gets hit. 2018/05/07
The daily RP tank is almost full. 2018/05/06
The (daily) equity gauge is almost there... 2018/05/03
Equity fuel rises nicely - into neutral territory. 2018/05/02
No big changes 2018/05/01
The daily RP gauge soars. 2018/04/29
The RP gauges bounce back - just above neutral. 2018/04/25
The weekly bond gauge crashes 2018/04/24
The Risk Parity gauge finally crashes. 2018/04/22
Oil is the story - for now. 2018/04/20
No big changes 2018/04/18
Bond fuel is rising 2018/04/17
Waiting for bonds to help equities but it won't be easy ... 2018/04/15
The gauges fade ... 2018/04/12

Analysts

  • Chris Evans

    Analyst Years of Experience: 30
Chris Evans

We have a new performance of the fuel gauges.

Paratrade Systems Premium Report

Chris Evans

The equity tank is losing fuel due to higher yields.

Paratrade Systems Premium Report

Chris Evans

Equity fuel hangs in.

Paratrade Systems Premium Report

Chris Evans

The Yen gauge flips up

Paratrade Systems Premium Report

Chris Evans

Yen fuel remains very low.

Paratrade Systems Premium Report

Chris Evans

We have a new performance of the fuel gauges.

Paratrade Systems Premium Report

Chris Evans

The equity tank is losing fuel due to higher yields.

Paratrade Systems Premium Report

Chris Evans

Equity fuel hangs in.

Paratrade Systems Premium Report

Chris Evans

The Yen gauge flips up

Paratrade Systems Premium Report

Chris Evans

Yen fuel remains very low.

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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