The Macro Traders US Equity Risk Index

This past week gave us the most bearish reading that we have seen since last October. We dropped from a reading of 36.11% all the way down to 11.11%. Remember that higher readings point to a better outlook for equities.

Stock Market Risk Index

Right now the only thing that is saying buy equities is that we are very oversold and are likely due for a bounce. Valuations are starting to tick up a bit as SP500 earnings have been dismal at best making the markets P/E ratio to climb a bit. Market internals are in horrible shape with the NYSE and NASDAQ A/D lines going off a cliff the past few weeks. Finally world leaders are simply not leading. In the US Obama, Geithner, and congress have up to now dropped the ball in a big way and have only inspired more selling instead of any confidence at all that they have a clue as to what they are doing. Abroad we have awesome policy makers like Jean Claude “Van Damme” Trichet who is only now coming around to the fact that financial conditions in Europe are horrible. In fact as readers of our weekly letter know we are very bearish on the entire EU as we think there is a good chance that the Euro doesn’t even exist in a few years. If you think that the banking system in the US is on the ledge then take a look at countries like Austria where they are heavily exposed to Eastern Europe.

We are not doom and gloomers but until our supposed leaders start leading we think that the market will have a hard time having a sustained move up. That being said if market internals can consistently improve and we find some leading groups in the market we could have a sustained rally. But for now we are trading small and are really just sitting on a few positions and a large pile of cash looking for rewards that justify the risks.

Happy Trading,
The Macro Trader

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.

Global Macro Trading 101

We here at feel that global macro is one of the best styles of trading and investing that there is.  Instead of locking yourself into one asset class or trading style, global macro allows you to focus on the best risk-to-reward opportunities.  If the best trading opportunities are in the bond market why do you want to be stuck in equities or commodities?  Global macro allows you to go wherever you can find the best trades.  In addition to finding the best risk to reward opportunities on a macro level, you are also better able to find the best opportunities on a micro level.  If housing is going to go down then who cares if housing stocks look “cheap”, if raw materials are collapsing then why would you want to be buying steel producers?  No matter how you look at it every investment decision you make contains a macro call.

Because of the macro calls inherent in every investment decision we at have put together our Macro Trading 101 course to help give you an overview of what indicators you should look at to help decipher the economy as well as to learn what the primary drivers are for each asset class.  After we have built a solid foundation we then go over how to use risk management techniques to determine when to buy, when to sell, how much to buy, and how to contain portfolio risk.

Why would we be offering this course for free? is a research firm and our primary product is a weekly newsletter that focuses on global macro trading using ETF’s.  We feel that by better educating potential subscribers about what global macro is, we will be able to reach more clients.  Whether you subscribe to the newsletter or not we hope that you enjoy the e-mail course.

The course is delivered via e-mail in PDF format.  You will be receiving two installments each week.  If you have any questions or comments feel free to drop us an e-mail and we will be happy to help you.  One last thing, we hate spam as much as anyone and will never rent or sell your contact information.  To begin receiving Macro Trading 101 just fill out the form below.