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?


Chris Evans

Yen fuel tank gets a refill

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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.

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Chris Evans

Still prefer bonds over the Yen

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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.

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

The equity gauge will be sticky.

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Chris Evans

A new trauma even fills up the equity fuel tank.

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Chris Evans

Today's rally was pleasant but somewhat expensive

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Chris Evans

Did we get enough additional fuel to add to our long equity position?

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Chris Evans

Equities are running out of gas. They need a good surprise from Washington or ...

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.

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