If you ask a Behavioral guru to define accuracy this is what he will say. The difference in forecasted and actual is accuracy. According to fractal geometry, this is an incomplete information. It’s the degree that you are studying, which will define accuracy. Degree, meaning the time frame, multi month, multi week, multi day, multi hour etc. Accuracy on different time frames will be measured differently, and this is one huge gap in the subject of behavioral finance, as it does not define the concept of degree.

WAVES.INDIA studies intermediate (multi week) to minor degree (multi day) price trends. And in the last one year, we have made 13 intermediate forecasts and near 40 minor trend forecasts. We have measured accuracy on intermediate time forecasts. All our reports talk about levels and it’s the levels, which judge how accurate we are. We have pulled out the levels along with the trends and compared forecasted with actual. An average actual intermediate move was 23% large. The total absolute actual move on Sensex for the year (both up and down intermediate trends) was at 330%. WAVES.INDIA captured 240% of this total move. The market letter captured average 17% of the 23% move. This gives us an accuracy of 74% for the year. We have detailed out the reports, the dates, the Sensex levels and have tabulated all of them in a tracker.

Our preferred positive view was challenged during the week, as prices pushed below SENSEX 9,500 levels. Now prices have moved back up again. TICKS.INDIA members were updated with the SENSEX DAILY KEY REVERSAL on 29 DEC (SLIDE 1). We are back on preferred positive again. And immediate resistances are the open gaps lying at 9894 levels. Above this we have no doubt, regarding the first positive week in JAN 2009.Enjoy the latest WAVES.INDIA ACCURACY REPORT 2008.

Happy New Year

ORPHEUS INDIA RESEARCH

WAVES.IND. is a perspective product published on Monday and Wednesday. The report highlights Indian Stock Market top sectoral Indices and Sensex (BSE 30) viz. BSEOIL, BSESC (Small Cap), BSEMC (Mid Cap), BSEHC (BSE Health Care), BSEPHARMA (Pharmaceuticals), BSECG (Capital Goods), BSEBANK (Banking), CNXIT (Technology), BSEFMCG (FMCG), BSEAUTO (Auto) etc.. The product also covers all the 30 Sensex components. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools, sentiment indicators and other alternative research tools like INTERMARKET to spot outperformers.

Reuters RICS. STOCKS. MAHM.BO, MRTI.BO, LART.BO, TAMO.BO, ACC.BO, ABUJ.BO, GRAS.BO, HDBK.BO, ICBK.BO, SBI.BO, HALC.BO, RLEN.BO, BHEL.BO, HLL.BO, NTPC.BO, SATY.BO, TCS.BO, INFY.BO, WIPR.BO, BJAT.BO, ONGC.BO, RELI.BO, RANB.BO, CIPL.BO, DLF.BO, TISC.BO, ITC.BO, BRTI.BO, RLCM.BO

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Author: Orpheus | Date: 31 December 2008 | Comments (0)

Categories: Accuracy India, India

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We have been waiting for this set up since OCT 2008 low. It was easy to look for a bounce from 27 OCT market low. There was historical volatilities, extreme momentum and global panic. Though choppy, we got the anticipated bounce. And what a bounce it was, gapping, sideways and slow. Prices have almost lost two months of trading action, stressing brokers and testing market patience. And now we barely reached 5 NOV highs and the market structure started looking weak again. Along with the bounce, we anticipated this choppy action too, when we wrote ‘Weak A, Phony B, Missing 1’. Now that the phony B is behind us and C up has started to crack, we would like to review the overall market structure.

Every fractal structure can be labeled as A-B-C or 1-2-3. It’s only after three legs are complete that we understand whether the move is a trend or a counter trend. When after the third leg i.e. a C or 3, markets begin a new impulse in the opposite direction (a clear five), we can clearly say that the previous three legs were A-B-C and not 1-2-3. On the other hand if after the third leg (C or 3), markets start to get choppy and fail to move in the opposite direction, despite negative news, we can assume an ongoing 4 wave structure, with a final 5 still pending.

We are at the same inflexion now. Sensex and NIFTY don’t have much space lower to move. If we are indeed in a coiling 4 and not a real reversal, markets should turn up now. SENSEX and NIFTY should continue to hold above 9500-9600 and 2920-2930 respectively. A move down from here would dash all OCT low hopes for a sustained move and we will brace up for a retest of OCT lows and possibly continued negativity in first quarter. This seems to be a low probability scenario for us at this stage. We think markets are in a potential 4 wave, which should find buying interest with every marginal dip.

NIFTY gaps, mid channel intermediate supports, weak sectors like CNXIT still above OCT lows and sideways structure on BSEOIL and BSEBANK validate our preferred view. Whether our preferred view is correct and we are in a 4 wave, should be clear tomorrow or a day after Christmas. We are expecting Santa to get a rally. These are tough times to expect too much, but we will pray.

Enjoy the latest WAVES.INDIA

Merry Christmas
ORPHEUS INDIA RESEARCH

WAVES.IND. is a perspective product published on Monday and Wednesday. The report highlights Indian Stock Market top sectoral Indices and Sensex (BSE 30) viz. BSEOIL, BSESC (Small Cap), BSEMC (Mid Cap), BSEHC (BSE Health Care), BSEPHARMA (Pharmaceuticals), BSECG (Capital Goods), BSEBANK (Banking), CNXIT (Technology), BSEFMCG (FMCG), BSEAUTO (Auto) etc.. The product also covers all the 30 Sensex components. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools, sentiment indicators and other alternative research tools like INTERMARKET to spot outperformers.

Reuters RICS. STOCKS. MAHM.BO, MRTI.BO, LART.BO, TAMO.BO, ACC.BO, ABUJ.BO, GRAS.BO, HDBK.BO, ICBK.BO, SBI.BO, HALC.BO, RLEN.BO, BHEL.BO, HLL.BO, NTPC.BO, SATY.BO, TCS.BO, INFY.BO, WIPR.BO, BJAT.BO, ONGC.BO, RELI.BO, RANB.BO, CIPL.BO, DLF.BO, TISC.BO, ITC.BO, BRTI.BO, RLCM.BO

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Author: Orpheus | Date: 24 December 2008 | Comments (0)

Categories: Accuracy India, India

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STEEL and ZINC have held on above previous lows. This is the kind of activity we expected after SILVER started giving leadership signals last few trading weeks. Hindustan ZINC the metals major has turned from 0.786 all time FIB and also has witnessed intermediate RSI turning above 40 (SLIDE 1).

The metals complex remains at key inflexion levels and the next few months decisive in terms of the commodity boom and the economic cycle. We feel both Hindustan Zinc and NSTL (NIKKEI Iron and Steel) are good proxies for their underlying metals and are at potential turn around levels.

As anticipated Platinum is also moving sideways (SLIDE 9) and SILVER has failed to push to a new low. SILVER also has a positive momentum setup on both SILVER SPOT INDIA and XAG (SLIDE 7).

Anticipating Gold to keep sideways to negative and rest of the metals sideways to positive is indeed a tough call. But this is what relative performance is all about. Gold is back at key inflexion points of multiple weeks at 830-840 levels. These are not only MINOR FIB projections, but also key conventional resistances. A break at respective levels on a weekly basis can see Gold back at 900.However, we would still need further positive price confirmation to look that far. The overall formation from key primary supports at 720 still looks corrective to us and there is no momentum confirmation too. And above that we have the GOLD CYCLE illustrated in detail in the INTERMARKET CYCLES GLOBAL report, which still points lower. We will take it level by level.

Enjoy the latest WAVES.GOLD

WAVES.GOLD is a perspective product published on Monday and Wednesday. The report highlights GOLD and other precious and base metals. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools, sentiment indicators and other alternative research tools like INTERMARKET to spot outperformers.

REUTERS RICS: XAU=, XAG=, XPT=, CU-NYC, .SPGSIZ, SPGSIA, .NSTL

Enjoy the latest WAVES.GOLD

WAVES.GOLD is a perspective product published on Monday and Wednesday. The report highlights GOLD and other precious and base metals. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools, sentiment indicators and other alternative research tools like INTERMARKET to spot outperformers.

REUTERS RICS: XAU=, XAG=, XPT=, CU-NYC, .SPGSIZ, SPGSIA, .NSTL

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Author: Orpheus | Date: 15 December 2008 | Comments (0)

Categories: Accuracy India, India

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We had extreme negative events surrounding the markets, but OCT lows remain unbroken. In both SENSEX and NIFTY, prices did not even retest OCT lows and held above our anticipated gap levels 8,551 and 2,536 respectively (WAVES.IND 121108). BSEOIL just like SENSEX and NIFTY also held above open gaps near psychological levels and pushed higher.

The question regarding market strength seem unequivocal. Terror could not take the markets down, as we explained last time. Markets bottom take time. The time factor starting OCT low also seems to be addressed as market has taken more than a month to base. Momentum is also turning up on the intermediate time frame (multi week) for many BSE 30 stocks and Indices. CNXIT, the INDIAN TECHNOLOGY index has already broken above previous highs. And if this all was not enough, we have the DOW pullback from 7,500 levels till 9,000 levels.

We have carried a new intermarket cycles case of BSEOIL vs. SENSEX. The pair has an average cyclicality of 9 months. BSE OIL has hit a cycle underperformance low against SENSEX. This means that heavyweights like Reliance might find bottoms and turn up. Our positive preferred case remains valid.

Enjoy the latest WAVES.INDIA

ORPHEUS INDIA RESEARCH

WAVES.IND. is a perspective product published on Monday and Wednesday. The report highlights Indian Stock Market top sectoral Indices and Sensex (BSE 30) viz. BSEOIL, BSESC (Small Cap), BSEMC (Mid Cap), BSEHC (BSE Health Care), BSEPHARMA (Pharmaceuticals), BSECG (Capital Goods), BSEBANK (Banking), CNXIT (Technology), BSEFMCG (FMCG), BSEAUTO (Auto) etc.. The product also covers all the 30 Sensex components. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools, sentiment indicators and other alternative research tools like INTERMARKET to spot outperformers.

Reuters RICS. STOCKS. MAHM.BO, MRTI.BO, LART.BO, TAMO.BO, ACC.BO, ABUJ.BO, GRAS.BO, HDBK.BO, ICBK.BO, SBI.BO, HALC.BO, RLEN.BO, BHEL.BO, HLL.BO, NTPC.BO, SATY.BO, TCS.BO, INFY.BO, WIPR.BO, BJAT.BO, ONGC.BO, RELI.BO, RANB.BO, CIPL.BO, DLF.BO, TISC.BO, ITC.BO, BRTI.BO, RLCM.BO

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Author: Orpheus | Date: 01 December 2008 | Comments (0)

Categories: Accuracy India, India

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The only two indices to have fallen less than 30% among the Indian Indices are BSFMCG and BSEHC (Health Care). Readers of WAVES.INDIA would know that these are our top sectoral picks from THE LATE ECONOMIC sector cycle, we have been mentioning from the start of the year. However, it’s the third Index performer, which might surprise most of you. Amid all the global and local credit crisis, it’s the NSE BANK (Banking Sector) that has made it to the top three performers. YTD the Index has outperformed most of the Indices, with a fall at minus 36%. And if this still does not read well, the fact that NSE BANK is the only Index in the country to have given a positive performance for the quarter should be some screen alert.ORPHEUS RESEARCH AT REUTERS – UNITED KINGDOM

We dug into our analytic screens a bit more and found that the NSE BANK components screen is a lot polarized. One side we have a positive Bank of Baroda with a positive 2% YTD performance and on the second extreme we have ICICI bank, down minus 65%. It was the Sensex component and banking major at SBI (State Bank of India) with minus 17%, which seemed to still hold ground and validate NSE BANK’s last quarters positive performance.

SBI’s PRIMARY CHANNEL (RIGHT) has held on despite selling pressure. And now momentum (SLIDE2) also suggests that the JULY low might still have a chance to hold. This is why we feel SBI’s 1,350 – 1,400 levels can decide how low SENSEX is going to go. Till the time respective levels at SBI hold, keeping NSE BANK’s psychological 5,000 alive, we can have some MINOR bottom expectations here. However, please be clear that we are still looking for a price confirmation before reviewing our negative call continuation. We mentioned about UP BUT TOPPING (18 AUG 2008) first and then published THE OCT LOW perspective on 06 Oct 2008.

The idea of SBI saving the Sensex is indeed strange. But we are looking at it from the sentiment aspect. If Banks start non confirming the broad market declines, by failing to fall below JULY lows, we see this non confirmation as a building positivity and not otherwise.

In conclusion, till we have no price confirmation the trend across the market remains negative. And a break at NSEBANK 5,000 will only confirm the market negativity and push prices on Sensex and Nifty at least 12-15% more down from here.

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Author: Orpheus | Date: 20 October 2008 | Comments (0)

Categories: Accuracy India, India

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RELATIVE SHIFT

Just like 2007, we will see the sectors shift in and out of relative strength. And as Sensex keeps growing, its sectoral representation will increase or decrease based on how well the sectors perform. New sector leaders will get in the Sensex and underperformers will get out. While a high and higher Sensex might seem good for the economy, it will never convey the real picture early enough to make the most of high performing sector growth or early warning systems to get out of stagnating sectors.

This is what we tried addressing last year when we said that Energy and Materials sector should lead the Sensex higher after the first quarter of 2007. On the Energy front we also mentioned that we do not see Oil falling substantially below $50 and after Oil hits base, the respective sectors should assume leadership. We also mentioned about Auto and IT underperformance, which happened. There was another aspect we got right, we anticipated a negative trend till March 07 and a positive year turn around after that. About the things we got wrong…we were off mark on the Banking sector, as we suggested pre budget Reductions. BSE BANK moved up 66% in 2007. The banking sector indeed pushed us off our Sensex targets, which we did not foresee above 18000.

So as you see, the answer to Indian stock market outlook is trickier than the famously quoted “Sensex 40,000” in five years. We are not saying that it does not challenge us to get the target on Sensex right by two decimals (Elliotticians have done it prior), but market forecasting is extremely dynamic and to stick out for a potential turn level in 12 months is not an easy accuracy to deliver. However, Sensex targets can be built around sectoral and intermarket dynamics. The late economic cycle stage, which we discussed last time, is followed by topping and slowdown. After Sensex 20,000 market expectations are for 30,000, but we don’t see Sensex extending beyond 24,000 this year with the benchmark making a decade high this year.

Like we saw Auto, Pharma, FMCG and IT stagnating more than 15 months on average, while Sensex soared, it’s wishful thinking that Capital Goods and Banking will continue to outperform and will not pause if not exhaust. Sensex underperformed the Capital Goods, Banking and Energy sector in 2007. And these are the sectors which will finally validate our case. Credit cycles are behind the economic boom and even if India is sitting on a huge industrial and construction boom linked with the capital goods sector, credit and real estate are interwoven in the sector. Prices can’t rush ahead of itself and a rise of energy and material prices will only make it tougher for the capital goods sector to keep delivering, as costs go up. This year BSE Capital Goods sector should move its last leg up to complete the cycle trend the sector started in 2002. The index should complete the last leg up from current 20,000 levels to 25,000. This should be the first leading indicator after which identifying a Primary (multi year) top for Sensex should be easy.

And a move on Oil above $ 100 to potential $ 125 might look interesting to the energy speculators. But it will subdue the enterprising efforts some of India’s underperforming Auto sector majors are making to bring in luxury cars pitching to buy them from the other struggling global auto majors. Not to forget to mention the other ill effects of rising energy prices. So after the damage will be done by high energy prices in 2008, BSE Oil Index will also head into major resistances accompanied by primary (multi year) top on Oil prices.

Banking sector is also an early starter in an economic cycle. Sensex started moving up in 2001 four years after the uptrend in banking majors. So if Sensex has to form a primary top this year, Banking should lead. We are not looking above 15,000 on BSE BANK Index (up 25% from current levels). Bad timing as you may call it with Capital goods and Banking under pressure, Energy topping late 2008 or early 2009, we will be ready for the proverbial bust heading into 2010 and 2011 Benner cycle lows.

Selling in strength isn’t easy. We advise to reduce capital goods sector allocations and looking into Pharma and FMCG majors, which we consider defensive plays and emerging outperformers. About IT, we don’t see a reprieve yet, the negative surprises might keep coming. Utilities and integrated Metals and Materials Company should continue to fair well. From an Elliott count perspective, the 3 primary of the Impulse from 2001 has witnessed a double extension. And the best case scenario expects atleast a 3 Primary (multi year) top this year, as the sectors witness the relative shift once again.

Author: Orpheus | Date: 07 January 2008 | Comments (0)

Categories: Accuracy India, India

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“Simplicity or singleness of approach is a greatly underestimated factor of market success.” These famous words of Garfield Drew are very hard to learn. It’s like accepting that being a fool in markets is the first step to profit. As then you are always alert to a market surprise and never get into genius’s bias.

A genius doesn’t make money in the market, the man who accepts his foolishness can turn a better profit against all market intellect. It’s something similar to another street lore, which says “beating the markets is easy, beating yourself is tough”. And to add it all, we have the classic, “Markets don’t work on hope”.

We at Orpheus believe that good research is not about making things complex, but making them easy. This brings us in sync with what Garfield said. If you still find it unpalatable, give us a minute more.

Just like POWER vs. SENSEX (India, Top 30 Index) or GOLD vs. OIL, two assets from the same market or two sectors from the same economy or two trading economies can never be disconnected. It’s all linked, Indian Rupee with Japanese Interest Rates or Brazilian sugarcane with Nat Gas or Shanghai with Soya.

The last two columns we got cues about Indian markets topping any time in the next few weeks owing to the POWER outperformance which means something as simple as an electricity bill getting more attention than all that portfolio “value”. And since ‘POWER’ is also a leading indicator for market tops along with Gold, which is a crisis commodity, we have a lot cooking here in July.

Now with CNXIT (Indian Tech Sector) vs. SENSEX ratio line also reaching an extreme, we have another cue that we are heading for at least a multi month top on India. BSE 30 has never outperformed the CNXIT since 2003. How could it? We are the ‘Tech’ nation, technology being a core competency. No it’s not like that. Technology is an early economic cycle sector, which invariably does worse when markets step in a late economic cycle stage and well in an early economic expansion. It’s a leading sector for the economy and the out performance or parity peformance is CYCLICAL. The last two times SENSEX-CNXIT ratio line reached near parity (1) was in Apr 2004 and May 2006. We all know what happened, massive drawdown, which we had someone to blame on. First time it was the BJP (leading political party) loss and second time the Hedge fund panic.

Now we have reached there again, July 2007. Well timing is a tough job, but it seems there’s not much the indicator can travel north from here. So if we assume we are at another inflexion point, the equity meltdown should start any time soon. INTERMARKET is simple. Let’s see how this simplicity pans out this time.

Author: Orpheus | Date: 08 July 2007 | Comments (0)

Categories: Accuracy India, India

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Al Ries and Jack Trout summed it beautifully. To become successful in life, you need horse sense to ride a winner. When to get on a sector horse and when to get off is a sense not every body has. Identifying outperformers from underperformers needs home work.

For example, sector risk is the greatest contributor to price fluctuation in a stock, it is very important to determine sector relative strength. Relative strength is a ratio line, a tool so simple and effective that it generally gets overlooked. “How can something so simple work?”. The beauty of Relative strength is that it can keep you invested in strong stocks for a long time, allowing you to participate in the gains. If the sector or stock continues to have positive RS for years on end, while broad market moves up, this would mean higher returns for the sector or stock under study. Relative strength allows you to let your profits run.

And on the other hand if the indicator is negative, it allows you to get off a horse not running the race and to move to one that is. Given that market goes up two thirds of the time and down one thirds of the time, going to 100 per cent cash by selling all your positions is a huge bet. A more sensible approach is to weed out the poor RS performers and sell those stocks to raise the cash level in your portfolio. The charts on the right are the RS chart of CNXIT (Tech Index) against rest of the sectors in India. CNXIT has clearly underperformed Auto, Capital Goods and Oil sector in India. The ratio stands clearly below 1 and technically we don’t see the ratio coming above Parity soon. This means continued underperformance. Then we have CNXIT vs. BSE BANK. The ratio line rules near 1. This is in sync with CNXIT vs. Sensex RS, which moved up after the Jun 06 dip. But the bounce back on the RS is hardly encouraging. This leaves us with FMCG, Health Care and Public Sector. Even here CNXIT seems to have hit if not significant atleast intermediate resistance.

Now, if this is too simple a portrayal for us to convince you to reduce your Technology allocations. Then it’s our horse against yours. Let the best one win.

Author: Orpheus | Date: 29 January 2007 | Comments (0)

Categories: Accuracy India, India

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 The Indian economic cycle is heading to the late expansion stage. Theoretically there are five stages viz. early expansion, middle expansion, late expansion, early contraction and late contraction. The very fact that we are heading to the late expansion stage suggests that we are still away from a top and 2007 might see a new high above 14000 before the real slowdown starts.

We at Or-phe-us still see the immediate preferred direction sideways to down with a potential upward breakout probably after first quarter. The Sentiment Theorist highlighted broad market non confirmations in Nov 06, which still stand firm. As barring Sensex, BSE BANK, CNXIT and BSE Capital Goods Index, rest all the Indices (Health Care, Small Cap, Mid Cap, BSE OIL, BSE FMCG, BSE PSU, BSE AUTO) are still below May 06 lows. Historically, such non confirmations do not guarantee that markets may turn down or remain sideways, but if you look at it from the Intermarket perspectives and add in a few technical aspects, we have enough reasons to validate our case.

Capital Goods sector has exhibited a clear leadership since 2004 with average returns over the last three years near 80%. This was the only sector to churn up more than 100% ever in a year. Capital Goods or Industrial sector growth mark the best run of the economic cycle. Materials and Energy sector should assume leadership from current levels. And the effects should be visible starting first quarter.

Materials and Energy: Though we are still negative on ZINC and other base metals on the intermediate term, materials sector is a mixed bag and steel and aluminium still seem to have upside left. Integrated Aluminium companies are still trended up. On the Energy front, we do not see OIL falling substantially below $50. After OIL hits base, the respective sectors should assume leadership. Till then we can see some negativity in both the Energy and materials sector. Energy is also a late expansion sector and seems in sync with our preferred wave count on market.

BSE BANK was the next best performer after capital goods sector. Credit expansion is the highest in late expansion stage. This boosts banking profitability on one side and makes banking sector very vulnerable to corrections. We are near our price targets on the sector and sector components and recommend pre budget reductions on the sector.

Technology: Despite the noise that Infosys and Indian Tech gets abroad, the sector has underperformed every other sector in 2006. The underperformance should continue. Technology is a Middle expansion sector and does not do well in late expansion sectors (current). We still believe the technology sector prices should correct sizeably from current levels. We will not be surprised if Technology gives a negative return for 2007.

The automobile sector should see negative surprises. The index and its constituent stocks should decline further from here. This push and pull of various sectors should result in the sideways to net negative movement we are expecting till the first quarter of 2007. In conclusion, banks and technology alone cannot sustain the markets at current levels. And with the capital goods story being more than three years old, we need smart sector allocations as we head into late expansion. Energy and materials should start ticking from this quarter. Let’s be conservative in 2007.

Author: Orpheus | Date: 08 January 2007 | Comments (0)

Categories: Accuracy India, India

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