QUANT SYSTEM TRADE UPDATE - 27.11.21

From the desk of Capt.D.Ganesh Raja

Dear Friends,

I would be out at sea attending vessels back-to-back, for next few weeks and won’t be able to update you all about happenings in the markets. Nifty closed this week at 17026.45. In my last post I had mentioned that Quant system had given an exit on 16.11.21 at 17999.20 and we had a steep fall in the market last week. It would be very easy to blow own trumpet and say from top of roof that I had predicted such a fall. It is simple, if we bluff our way eventually, we would be exposed. The idea is to showcase the system potential, without unnecessary showboating.

Someone asked me that does my intuition guide me in making decisions. Basically, anyone who practices their craft with passion, it is natural to develop some intuition, but having said that I don’t rely it, but rather rely on my robustly built system to give reliable signals. We need certain amount of discipline to follow the very system which we have carefully designed.

Though the Quant system gave an exit it did not give any short signal in the intermediate timeframe. I avoid giving any recommendations for short timeframe, especially now because of the busy schedule and the necessity of monitoring closely.

Now let me discuss the reason I had recommended exit in Nifty. Sometime ago I had given a time window from which market could turn and also been saying that system might give an exit, but could not say when exactly. There were indications in the system, but if we prematurely exit, we might miss out on the incremental returns, e.g. market did have a big fall in the week ending 25.01.21 at 13364.60 but it rallied dramatically from next week itself and rallied all the way till 18338.55. I had also said that Nifty was forming symmetrical pattern since 03.09.21, which is a well-known “Head and shoulder” pattern and some of the proprietary filters were indicating successful break of the neckline of the pattern. In addition, the macroeconomic indicators were also not painting a pretty picture. Few of the indicators I have already discussed in previous posts. I had also discussed about unique pattern being formed by VIX and reasons to watch it closely. This week VIX has spiked up and presently placed at 16.66.

Some people have been asking what about long term holdings and to them I say that one should leave them as it is without bothering much about the correction which might last a few months. In fact, the correction can be utilised to buy quality stocks or increase allocation in mutual funds. My blog is not intended for the purpose of making decisions for long term investment but for making intermediate term trading decisions. Churning of long-term investments needs a detailed study based on one’s long term financial goals.

However, I have been interacting with lot of seafarers onboard who have absolutely no idea about basics of investment and that I thought of focussing on educating them.

GOLD: System gave a buy signal in Gold on 22.10.21, at 47,797.0, with a stop loss at 47120.0. Continue to hold gold.

Target1 – 50685.0, Target 2 – 54541.0, Leverage 0.30x.

Minimum profit potential – 6%. Asset allocation profit potential – 1.8%.

Minor trend: Down, Intermediate trend – Neutral, Long term trend – Neutral with upward bias.

Note for reading this report:

Note1: The stop losses are on end of day basis

Note2: When trade recommendation is given around a certain price, it means that the trade may be taken the next trading day or if a price zone is given for taking a trade then trade has to be taken on the day price reaches within that zone.

Note3: A separate excel sheet is attached to view the performance of the recommendations, which also reduces the task of individually reporting the performance of each trade recommendation. Viewing the excel sheet “TRADE RECOMMENDATION LOG” will be self-explanatory. Also in this sheet Trade recommendations which are still active are marked.

When signals are triggered mid-week, that is updated in log sheet and covered in the weekend report, due to paucity of time.

EXISTING TRADE RECOMMENDATION OVERVIEW

Gold is the only trade recommendation now and has been covered above.

NEW TRADE RECOMMENDATION

NONE

TOTAL LEVERAGE OF ABOVE NEW TRADE RECOMMENDATIONS: NA

COMBINED PROFIT POTENTIAL FOR ABOVE TRADES: NA

TIME WINDOW OF TRADES: 7 DAYS TO 30 DAYS.

TOTAL LEVERAGE INCLUDING UNCLOSED POSITIONS AS PER PREVIOUS RECOMMENDATION: 0.30X

RETURNS TILL DATE SINCE 04.07.20 : 57.38% (AS OF FRIDAY 26.11.21 CLOSING)