QUANT SYSTEM TRADE UPDATE - 10.07.22

From the desk of Capt.D.Ganesh Raja

Dear friends,

The delay in updating the blog was due to my assignment in Abu Dhabi, subsequently coming home to find all my family members down with severe viral, in addition to home renovation. Also, until a clear level is reached and multiple confirmations are indicated by the system it is prudent to stay on the sidelines.

Markets are gyrating between Ukraine war US Fed rate hike, recessionary fears doing rounds and volatile crude oil prices, so on so on and so forth.

At this moment there is no clear indication regarding the market direction. Indian markets in the minor time frame are following the global trends and exactly when the de-linking will happen has to be seen in the future. India VIX is currently placed at 18.39 and nothing conclusively can be made about the direction it will move which is another reason for me to recommend to stay out of the market. The situation might quickly change and I will update as and when, since I am ashore and not attending any marine assignments, I will be in a position to do so.

Nifty has made a strong weekly closing after a gap of three months but still not out of the woods. Having said that, the correct level for giving a short recommendation hasn’t been reached. I will update again during the week after doing research and running the filters on certain macroeconomic indicators.

USD/INR: The recommendation of going long on the US dollar INR currency pair was spot on and currently trading at 78.94 as of last close. I would strongly recommend to book profits at these levels and wait for further trade confirmations to trade this currency pair. There is a strong possibility of RBI making some kind of intervention if the rupee breaches 80 mark. So let us wait and watch. This trade recommendation has yielded a profit of 4.44% on deployed capital.

MCX CRUDE: This trade recommendation on 04.06.22 to go long was off the mark due to unexpected volatility in the global crude oil market. Stop loss was triggered on 23.06.22 at 8222.0 resulting in a loss of 2.73% on deployed capital.

Nifty energy index and crude oil have followed growth global trends and have closed lower however they are but the extremely lower so oversold levels from which a bounce could be expected.

The recessionary fears took the wind out of sail in crude oil markets and the fall was very sharp. There is nothing conclusive about it and crude oil is in extremely oversold levels. Top investment banks are making all kinds of predictions in crude oil ranging from USD 350.0 a barrel to USD 70.0, so please excuse humble me. I will continue to monitor this.

GOLD: Gold for now has been on a prolonged consolidation mode and is negatively impacted by aggressive rate hikes by Federal Reserve. The views being expressed by market experts are as diverse which doesn’t help much. The long-term trend in gold seems intact and given the increased volatile situation in the global markets it is always prudent to hold at least third of portfolio allocation in gold. As I said before if one has to ride out a long-term trend one needs to be patient to bear with the short-term contra trend movements, including seemingly convincing arguments which strongly counter against the long-term trend. That has always been the case and will continue to be so.

Since none of the indices have given a clear view, I will refrain from giving any recommendations for now and would be watching closely to update you all during the week.

RETURNS TILL DATE SINCE 04.07.20 : 59.46% (AS OF FRIDAY 08.07.22 CLOSING)

TRADE RECOMMENDATION LOG.pdf

Download PDF • 590KB