This week The Macro Trader equity risk index climbed from 11.11% to 22.22%. As great as a jump like this looks it is still quite bearish as the index goes from 0% which is very bearish to 100% which is very bullish. In a regular bull market it will usually be in the 65-85% range. As you can see in the chart below during an insane bear market it tends to hang out in the 30% and below range.

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As this is being posted Tuesday afternoon you have likely seen the huge rally we had today with the SP500 up over 6% in one day. While this will likely have everyone on bubblevision (CNBC) calling a bottom and telling us to be buying up everything we can, we take the view that in a bear market rallies are made to be shorted. In our weekly newsletter The Macro Trader we have taken a few very small long positions but are expecting a multi-day rally that will likely give us several good shorting opportunities. We are in a bear market, the domestic economy is in a recession, and the global economy is in a recession. Until we see evidence to the contrary the primary trend is down and that is where investors should be spending most of their efforts.

Happy Trading,
The Macro Trader
Dave@TheMacroTrader.com

P.S.If you are interested in learning more about Macro Trading sign up for our FREE Macro Trading 101 course in the box below.

P.S. Over the weekend we launched out membership site and are excited for the additional coverage and education that we can now offer our subscribers.

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For the week ending 1/9/09 our Equity Risk Index made a 6 month high of 38.89%. Last week crushed it and brought it all the way back to the readings we saw in November of 22.22%. When the market fell apart breadth fell apart and T-Bond relative strength picked up as money left stocks and went into bonds.

So what will get the risk index climbing again? Consistent breadth, a real uptrend, and a decline in Treasuries would be a start. But what should be no surprise to our regular readers, we are not expecting that anytime soon.

Happy Trading,
TheMacroTrader.com
Dave@TheMacroTrader.com

P.S.If you are interested in learning more about Macro Trading sign up for our FREE Macro Trading 101 course in the box below.

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We at TheMacroTrader.com have one major purpose, to provide you with actionable and profitable trading ideas through our weekly newsletter and mid-week updates. Last year our model portfolio did a great job by beating the SP500, the Barclays Macro Index, and actually being positive for the year.  In order to better serve our current clients and to wxplain to prospective clients what it is that we do we are now offering a FREE Macro Trading 101 course.  It is a multi-part e-mail course that is sent out twice a week.  Each e-mail contains a PDF attachment that covers a topic related to global macro.  Our first few installments cover the benefits and advantages of global macro and then we start to delve into different asset classes, their drivers, and how to trade them.  Later in the course we will be getting into economic analysis, risk management, and even finally a gameplan that you can use to help you find where the best risk to reward opportunities are hiding.

To receive our FREE Macro Trading 101 course simply fill out the form below.

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