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Paratrade Systems Weekly Research News

New Trauma in the Stock Market

We must find a way to measure a period of fear that works in both high volatility environments and low ones. We can then count the days since the event to determine when a bull market is getting long in the tooth. The safest time to buy the market is right after the trauma. If the market fails to rally after a few days then we must be ready to tighten stops and consider whether we have entered into a bear market.

We can see the measure of trauma (Vix(Vix)). The key level is -8.75. The “Post-trauma window” was at 61 before the market (finally) got hit. We now expect a rally that should have legs. The equity fuel gauge hit 89 (0-100 is the range) last night so subscribers saw all this unfold in time to buy and add to positions in the S&P 500. There are more examples of this trauma measure at www.ParatradeSystems.com

All your questions and comments are welcome.

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