Our US equity risk index has been at the same level for three weeks now.  Not too much has changed.  We have a few valuation and sentiment indicators that are bullish and everything else is bearish which does not bode well for the market.  As we have stated in our newsletter we are short term positive and long term bearish.

Again the higher the index level the more bullish we get and conversely the lower the level gets the more bearish we get.

macrotrader.com/wp-content/uploads/2008/11/stockriskindex.jpg” title=”Stock market risk index”>

We hope that you find the weekly equity risk index useful.  In our newsletter we also provide risk indexes for fixed income and precious metals.  These are but a few of our proprietary models that we use to help guide us in our trading.

Happy Trading,

The Macro Trader

P.S. We are currently running a 1-Month free trial offer.  Simply e-mail editor@themacrotrader.com with trial in the subject line.

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Macro Trading has several advantages to regular trading or investing.  Most people either are long only or they trade one asset class.  Instead of focusing on one area of the financial markets, Global Macro Traders focus on the best risk to reward opportunities they can find regardless of asset class or whether it is long or short.  By not tying ourselves to one source of returns we can better balance our risk profile with our return objectives.  Global Macro allows one the flexibility to not be dependent on any one thing or be held hostage by the downside of a particular asset.

Here we are comparing the returns of the Barclays Global Macro Index against the SP500.  As you can see the Macro Index has performed significantly better than the SP500 from 1997 through the end of October 2008.

While the Global Macro Index is currently in a drawdown it is far smaller than that of the SP500. The SP500 is down -37.47% while the Global Macro Index is only down -7.14%.

Anyone that is still tied to the notion that all you need to do is buy and hold has lost money over the last 10 years. While we hope that investors are finally coming around to the idea of absolute returns and risk management, we also realize that investors by nature are irrational and that they will continue to repeat the same mistakes.

We here at The Macro Trader try to generate absolute returns because a relative loss is still a loss. If you are interested in learning more please send us an e-mail.

Happy Trading,
The Macro Trader

If you would like to receive our new FREE course “Macro Trading 101″ put your e-mail in the box below.

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When someone wants to see what we do we usually just e-mail them the last few issues.  We are now offering a 1-month free trial.  If you would like to receive The Macro Trader for one month simply e-mail Editor@TheMacroTrader.com

Happy Trading,

The Macro Trader

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Our stock market risk index did not change this week and remains at 25%. In simple terms the lower the reading the more bearish we are and the higher the reading the more bullish we are. As you can see in the chart we have been fairly bearish for most of the year.

Most of the economic indicators we follow are very bearish, the trend is down, breadth is poor, and money flows are negative.  On the bullish side sentiment is at extreme lows and valuations continue to improve.  We expect a rally here in the next few days but long term are still fairly bearish.

Happy Trading,

The Macro Trader

P.S. If you want to ensure that you receive every update make sure and subscribe by RSS or E-mail by clicking on the RSS button on the right hand side of the page.

P.S.S. This is usually posted by Monday of each week but due to travel delays it was late this week.

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Our stock market risk index did not change this week and remains at 25%. In simple terms the lower the reading the more bearish we are and the higher the reading the more bullish we are. As you can see in the chart we have been fairly bearish for most of the year.

If you have read our previous posts you know our active beta approach to managing some of the model portfolio.  The risk index is one of the primary inputs as to how much to invest.  Our complete model is a bit different but essentially you would invest X% of your account depending upon how bullish or bearish the model is.  Using this risk index you would only have 25% of your money at risk right now.  Since it dynamically changes depending upon what it expects out of the market it is not only a useful timing gauge but also helps measure the proper position size and asset allocation.

Hopefully this short explanation helps some of the answers that we have received lately regarding the risk index.  If you have more questions feel free to e-mail us.

Happy Trading,

The Macro Trader

P.S. If you want to ensure that you receive every update make sure and subscribe by RSS or E-mail by clicking on the RSS button on the right hand side of the page.

P.S.S. This is usually posted by Monday of each week but due to travel delays it was late this week.

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Our stock market risk index improved a bit this week.  The bulk of the improvements came from some of our sentiment indicators.  So now we have valuation improving and sentiment at an extreme.  In the newsletter we are positioned for a short term bounce but longer term we are still bearish.

macrotrader.com/wp-content/uploads/2008/11/riskindex1.jpg” title=”Macro Trading stock market risk index”>

Happy Trading,

The Macro Trader

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