Archive for February 10th, 2011

Late economic top performers: ONGC and Bharat Petroleum

Both structures look like ongoing minor complex correctives down. Both Jiseki cycles turned negative as prices reversed and pushed lower. The structures are still negative and suggest another potential push lower till previous intermediate lows and key Fibonacci projection levels: 250 in the case of ONGC and psychological 500 in the case of Bharat Petroleum.

Alpha is a daily strategy signal product that gives long only, short only, pair trading signals. Alpha is a numeric Ranking product based on TIME fractals. The signals are carried over minor (10-30 days) and intermediate (above 30 days) time frame. The signals are illustrated through tracker and running portfolios. Alpha can be used by fund managers for relative allocations, traders for leverage bets and high net worth clients for selective trades. This is a part of the time triads analytics developed by Orpheus Research.

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Coverage India: CNX100 traded stocks and Indian Indices.

Michesan Anna-Maria, Head of India Research. Anna discovered her interest of markets immediately after completing her graduate studies in Economics. She followed it up with post graduate studies in corporate finance. A host of research work in behavioral finance, option strategies and quantifying market sentiment followed. Anna covers Indian equity and combines Elliott, Time Fractals and Time Analytics to deliver accuracy across time frames. To review some of her work, check out the annual India accuracy report 2009.


Is the fall over?

INVESTORS - 1 month term expectations

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INVESTORS - 6 months term expectations

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EXPERTS - 1 month term expectations

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EXPERTS - 6 months term expectations

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Confidence in achieving personal targets on BSE over the next 6 Months

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STOCKS VS CASH - Current amount invested in stocks (% from total available)

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source: prognosis.ro

Is the fall over? - 10 Feb 2011

After the fall comes bottoming and bottoming can take weeks and maybe months. Accumulation is different from buying. It’s a slow buying process, where you wait for a price to come and you generally don’t run after the price. When do we accumulate? We can accumulate when prices are bottoming, as bottoming process can be long and may take a few weeks to few months. We also accumulate because we see value that we are willing to hold for longer term of 12 months to 36 months.

Now before we accumulate, the question to ask is whether the fall is over? RSR readings have not swung to the other extreme, so there seems to be more left on the negative side. We expect the readings to bottom sometime in or after March. As we move into spring, the sentiment might be at an extreme low and create real low and attractive value.

However, sector rotation suggests that some stocks and sectors might already have reached their bottom values and selected stock picking should begin. Our favorite stocks are Condmag, TLV and BRD.

Time to Fall - 10 Jan 2011

“You might say, Mukul for one time, at least make us happy. Tell us everything is good and worst is behind us.”

Our job at Prognosis and Orpheus is to be objective, even if you call us incorrigible contrarians. And above this we are following clearly defined rules. When RSR is at the top we sell and vice versa. Now the RSR has reached historical all time highs on monthly and 6 monthly readings. Even the confidence Index is heading to a new high. This has never happened.

So even if our larger secular view remains intact, these are not the prices one should enter. Whether markets fall for a few weeks or a few months, the correction should create opportunities to accumulate for long term, but not now we are looking lower.

There is another reason RSR reading are valid, sensitive and sharp. Just like RSR is suggesting a sentiment top, volatility Indicator VIX is suggesting the same, an extreme complacency. We have a consensus on VIX and RSR and that says “It’s Time for Equity to Fall”.

Let’s See.


Temporal Changes in Market Efficiency Journal

Time Triads, Time Fractals, Time Arbitrage, Performance Cycles are terms coined by Orpheus Research. Time Triads is our weekly market letter. The report covers Time Cycles on global assets and forecasts. The report uses alternative research techniques to study emerging markets and carries updates on behavioral finance, market fractals, econohistory, econostatistics, investment psychology, socioeconomics, pop cultural trends, macro economics, interest rates, derivatives, money management, Intermarket trends etc.

Saving the long-only trader

The first opinion is that markets can never crack. We say, “This is India, the crack is a correction, every dip is an accumulation.” This is followed by “Oh! it does not stop. What to do now? There are political, corporate rumours. We have already seen bad news. There are a few negative events like bank rates and industrial growth.” What’s next on the cards?

Well, if there is someone who really needs to be saved in the markets, it’s the long-only trader. The sad part is that the long-only trader is genetic. Silencing genes is expensive. And every time there is an opportunity to learn, the market moves up and the demarcation between the brains and the bulls gets blurred yet again. The long-only people are not value investors. They suffer from momentum investing and assume markets move only one way: up. They don’t understand hedging and risk. Some assume hedging is not for them. Risk is a post-event realisation. Till Sensex 16,500 breaks, there is a lower chance that Sensex could fall till 13,500. But in case of the 16,500 break, Sensex will fall till 13,500, which makes investing in India from 2008 a painful experience for long-only traders. They buy late and get out late. It’s a hard life.

We kept insisting that volatility was a threat and the markets could correct 20 per cent from the 2010 highs. It came a bit early. We talked about the Rieki hedge. On September 12, we explained how “The Rieki Hedge” strategy lets us pick up the best value from a universe of stocks. Second, it reduces risk by giving us the opportunity to short potential underperformers, hence reducing portfolio risk by creating a strategy hedge. Third, it increases our holding period for the overall portfolio. We can hold and accumulate the long spot for a longer period of time and similarly, we can hold futures beyond the intra-day volatilities.

Performance is cyclical like everything else; even portfolio risk is cyclical. There is a time the portfolio needs hedging and sometime it does not. The three things a long-only trader (who can’t hedge or short) can do are: first, to learn to be in cash as a percentage of portfolio; second, to understand sector rotation, be in relatively outperforming sectors and be out of relatively underperforming sectors; third, to learn to diversify and use Nifty ETF for allocation.

Markets are headed into a wall of worry. Sensex was supposed to underperform Dow, it did. Markets have reached conventional supports and I think a bounce is due before any further negativity happens. This is the only solace I have for the long-only trader.

This article was published in Business Standard India today

Time Triads, Time Fractals, Time Arbitrage, Performance Cycles are terms coined by Orpheus Research. Time Triads is our weekly market letter. The report covers various aspects on TIME patterns, TIME forecast, alternative research, emerging markets, behavioral finance, market fractals, econohistory, econostatistics, time cyclicality, investment psychology, socioeconomics, pop cultural trends, macro economics, interest rates, derivatives, money management, Intermarket trends etc.