QUANT SYSTEM TRADE RECOMMENDATION 11.06.23
- Capt D. Ganesh Raja
- Jun 12, 2023
- 4 min read
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 ,
I am back home after completing my marine assignment. I have been monitoring the markets and since there was no change in the suggested model portfolio and detailed synthesis done once in few weeks , update was not necessary.
Let us look at recent phenomena developing in global equity markets. Many of the markets have been rallying and many have been in negative zone too this year. Without getting into nitty-gritties of it, I thought of looking at The Dow Jones Global Index (symbol – W1DOW), last close – 505.70, which aims to provide 95% market capitalization coverage of stocks globally, including developed and emerging regions. This index is showing strength after a prolonged basing pattern and is on the verge of a breakout, though multiple confirmations have not been indicated as per Quant system. Does this mean that “Risk on” environment is developing? That would be interesting to wait and watch. However, since the immediate trend in this index is up, a conservative buy recommendation with leverage of 0.2x is suggested.
US 10 YR GOVT BOND YIELD: It has broken out of long term downtrend channel and presently consolidating. Consolidation might continue for a few months and it seems that further upward movement is likely post that. So one has to pay close attention to US Fed announcements and how they plan to tackle inflation if it resurfaces its ugly head.
(Please see attached chart of US 10 YR BOND YIELD)
CBOE VIX: (Please see attached chart of CBOE VIX) In the charts of any assets that is traded it is quite common to see symmetrical patterns appearing at intervals, maybe regular or irregular. This chart somehow exhibits the symmetry to the pattern which was formed between periods 2008-2013 (Marked with yellow line). That is a 5 year period and quite significant in any investor’s investing career.
I am not drawing conclusions here but the chart seems to indicate further period of low volatility period , followed by a spike.
Looking at domestic markets , Nifty, last close – 18563.40 has entered into profit booking zone as per daily charts and it seems like it might correct till 18300 to 18050 range, but since the weekly charts haven’t shown any reversal I have maintained long position in it. Readers who want to book part profit and don’t want to ride through a minor correction may do so, but that is not what my system is indicating. It is reader’s personal decision. For example Arvind Mills has generated 40.23% returns in one month, so it is natural for someone to be tempted to take some profits home.
Very often in popular electronic media and websites you would see plethora of views stating that if bulls have to sustain then market has to close above such and such levels or if it dips below certain level bears would take control etc. etc. It is a good entertainment to read all this but how actually such things translate into a trading decision defies my understanding. As I keep saying, such simplistic assumptions do not lead to anything unless you are entering and exiting for very short time intervals, which could be detrimental at times. Having said that, I am very well aware that vast majority of people are not comfortable in giving up some part of trading profits to ride a longer-term trend.
I will not mince words in stating that to ride out a long-term trend needs long experience and confidence in originally developed systems based on painstaking research. That is why it is said that, finally we take trading decisions based on our belief systems, more than anything else and I think there is no harm in that, as long as individuals are happy with their decisions.
The trade book is the only proof of a worth of a trader.
As per time cycle analysis which is also part of the system , it seems that markets might test a minor low between third week June to 2nd week July 2023. The market high seems to be on 12.08.2023. This is sometime away, so we will again review as events unfold.
I have left all recommendations till date unchanged, very well knowing that we might be entering a minor correction.
A word of advice based on my experience is, if any of you all are working on developing your own system, please be very truthful to yourself, instead of being tempted to choose of path of convenience to look good in eyes of others. Being totally sincere knowing very well that we can be humbled by the markets would be a great learning experience.
Please refer to the TRADE RECOMMENDATION LOG for details of the recommendations and the profit / loss of individual trades.
I will try connecting with you all soon.
RETURNS TILL DATE SINCE 04.07.20 : 87.96% (AS OF FRIDAY 09.06.23 CLOSING)
RETURNS TILL DATE SINCE 04.07.20 : EXISTING TRADE RECOMMENDATIONS: 1.60
LEVERAGE FOR NEW TRADE RECOMMENDATIONS: 0.20
TOTAL LEVERAGE: 1.80
ASSET ALLOCATION PROFIT POTENTIAL FOR NEW TRADE
RECOMMENDATIONS: 1.6%
TIME PERIOD OF TRADES RECOMMENDED : 15 DAYS TO 3 MONTHS.
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