QUANT SYSTEM OVERVIEW & SYSTEM TRIGGER - 24.03.24

From the desk of Capt.D.Ganesh Raja                                                                       

DISCLAIMER

Please be informed that the author of this blog by Capt Ganesh Raja Dhanuskodi (Hereinafter called Capt Ganesh) is not a SEBI registered Research Analyst or Financial Advisor. Capt Ganesh writes this blog to express his views based of more than two decades of experience in capital markets and based on the Quant system which he has invented and he does not do this for “consideration” as per SEBI regulations, which means he does not receive economic benefit through it. Readers of this blog must seek advice from registered Investment Advisors / Research Analysts before taking any trading or investment decisions.

Capt Ganesh has been investing and trading actively since 2001, building trading models since 2013 and has invented an AI based intraday trading system, which has a pending patent approval.

Dear Friends,

The Federal Reserve kept the fed-funds rate unchanged Wednesday, 20.03.24 , while most Fed officials are penciling in three rate cuts in 2024. This has lifted the mood of US markets.

In my blog some time ago, I had written about how they might keep the rates unchanged for some time, based on the synthesis of data.

We saw bit of a sharp selloff in the Indian markets for past couple of weeks or so , including a single say sharp fall, obviously invoking lot of coverage in social media, TV channels etc. etc. Then there is a routine “expert” view saying if markets fall below so and so levels it will go to whatever levels. Immediately this brings out wide ranging views and emotions, both which I choose to ignore, because being cognizant of the happenings is one thing but being swayed by it totally different.

I think in my three and a half of years or so of writing this blog, explaining the decision-making methodology, it has stood its test of time across varying market conditions.

I will talk a little about oil markets, because due to nature of my work I happen to deal with on a daily basis.

As per IEA, global oil demand growth is losing momentum, with annual gains easing from 2.8 mb/d in 3Q23 to 1.8 mb/d in 4Q23. A sharp drop in China underpinned an 830 kb/d decline in global oil demand to 102.1 mb/d in the last quarter of 2023. The pace of expansion is set to decelerate further to 1.2 mb/d in 2024, compared with 2.3 mb/d last year. China, India and Brazil will continue to dominate gains. I had again covered this sometime ago based on my Quant synthesis.

The energy index in the US fell by 1.9% over the past 12 months in February 2024, following a 4.6% drop in the previous month. It marks the 12th consecutive month of decreases in energy prices, albeit the softest in five months. We have to view this on the backdrop of Red Sea crisis caused due to Houthis attack on merchant shipping. If this crisis hadn’t been there we could have seen lower oil prices in recent times.

However based on my system indications it seems that in near term crude might rally , in intermediate term consolidate and in the long term rally. This might pose problems to domestic economy and markets.

Since the import component of oil for India is high, I thought of throwing light on this.

The second factor is the 10 year GS index , which has been rallying so strongly for long and seems to be hitting a block, at least that is what Quant system is indicating . If not a downtrend, it might pause the uptrend. Later need to have a fresh look.

The India VIX at 12 22 , after a brief spike is again falling and might go down to 10 levels for a brief period. Only post that we will have confirmation of this indicator direction but doing some pattern analysis it seems that it might rally from those levels to make multi month highs. Its too early to say that and we are not in the business of guesswork. I used the weekly indicators, with pattern analysis and then when I checked by superimposing on monthly indicators it showed this interesting possibility. I had covered in my previous blog regarding profit booking phase but there was never a sell signal as per the system.

Some investment experts are of the view that, given the high valuations in midcaps and smallcaps , there is value to be found in large caps. Looking at the chart structure, midcaps seem better placed for a strong rebound rally than large caps. “Put your money where one’s mouth is “, they say and all boils down to that. All fancy jargon, prowess of knowledge is worthless if it cannot be backed by real performance. Legendary trader Elder Alexander, in his inimitable style says that the problem with markets is you have to trade at hard right edge not in the past. My own portfolio is testimony to the performance, in which I have the liberty to take higher “risks “. Warren Buffet says, “Risk is not knowing what you are doing”.

 In my personal portfolio I have delivered returns of 85% in 7 months period with zero leverage , which translates in 145% returns annual returns. But the problem with some people is , no matter how much past data, real time proof etc, you show , they will always find a way to be doubt the credibility of it. In my simple understanding of things, there is nothing sacrosanct in investment world. It all works on a mandate you can gather from investors who believe a certain process or methodology works, based on empirical evidence and then go ahead and execute that. Also, if someone wants to be skeptical about it, I think it is their fundamental right to be so.

So, what does all this indicate? It just indicates that Quant system is indicating to hold positions for some more time and the gains could be sharp, though recently some of the gains were pared.

GOLD: Last close – 66180.00. Gold has broken out of a long consolidation phase and there seems to be lot of upsides going forward. Quant system mock portfolio has a 0.6x exposure to Gold and hence there is no further room at this juncture to add to position.

USD / INR: Last close – 83.59.  Aided by prudent exchange management and myriad factors, this currency pair has been in a stable band for a very long time but to the discerning eye, it can be spotted that the band has shifted to lower range of 82.80 to 83.40 and for the first time has broken out of this band. System hasn’t generated a buy signal on USD (Sell signal in INR) yet, so will wait for clear indications.

NEW SYSTEM TRIGGERS FOR MOCK PORTFOLIO

1.     PRAJ INDS: LAST CLOSE – 531.95. System gave a buy signal at these levels on 22.03.24  with stop loss at 450.0 

Target1 – 609.0 Target 2 – 775.0  Leverage 0.15x.

Minimum profit potential – 14.5%  Asset allocation profit potential – 2.20%.

Minor trend: Up, Intermediate trend – Neutral, Long term trend – Up.

RETURNS TILL DATE SINCE 04.07.20 : 143.54.% (AS OF FRIDAY 22.03.24 CLOSING)  LEVERAGE FOR EXISTING MOCK PORTFOLIO TRIGGERS: 1.75

SYSTEM EXIT DELEVERAGE: 0.15

 LEVERAGE FOR NEW MOCK PORTFOLIO TRIGGERS: 0.15

 TOTAL LEVERAGE: 1.75

 ASSET ALLOCATION PROFIT POTENTIAL FOR NEW PORTFOLIO TRIGGERS : 2.2%

 TIME PERIOD OF TRADES RECOMMENDED : 15 DAYS TO 3 MONTHS.

MOCK PORTFOLIO.pdf

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