Monday 7 November 2016

US Elections Dates And Trading Plan for Next Few Sessions

US polls Starts on November 08 and results are expected to come out by November 9th in the next 24 hours.
The race for the 45th president of United States has picked up some pace and has become much closer than that anticipated.
The race is between Hillary Clinton (Democrat) and Donald Trump (Republican). US elections are a two party system.  The markets in large favors the Democrat, partly for two reasons. 1. It kind of maintains a status quo with respect to policies of the democrat already pursued by Obama and 2. Mainly because Trump’s views are perceived as nationalist right wing and hence he favors trade and employment protection, which markets and businesses hate in general.
This is an event which is neither in our control or hands to predict or make work, however one might say. The thing is that there are only two possibilities so by random behavior 50% of predictions will be correct.
Lot of traders fail in the business of trading is because they perceive to believe that markets will work their way, while it is way beyond their control. Do we know the outcome- No, Can we trade the Outcome- Probably Yes. But the smart bet will be to trade it with a plan where the risk is capped, or the potential to earn on a move on either side. 
Knowing to manage your risks and protect your capital is more than half the job done.
This is where systematic trading / mechanical trading gives in the discipline to follow a strategy over and over again rather than being speculative.
The race recently picked up some steam because of possibilities of black votes swinging in favor of republicans and the alleged accusations into the email controversy. At the time of writing this, FBI has given Clinton a clean chit.
The Results will mostly by out by November 9th, 2016 9:30 AM IST
.How are markets expected to react?
Expect a volatile November series for the rest of the month, hence there can be possibilities of short bursts of directional trades. Advice would be to trade a time frame lower in this case to lock in gains. Especially until volatility subsides. This means if you normally trade daily charts, adjust and trade hourly charts.
My own hunch is that that even after that till the Christmas breaks market will remain a volatile traders market.
From a technical point of view until the base of 8450-8500 holds we will expect an upside. In case Clinton wins, which is a still better probability we can see a bit of euphoria for some time
To trade the markets, I advise that traders use our ProQuants Hedged strategies and manage the risks while ensuring good returns too.


Tuesday 20 September 2016

The Big Question- Where is NIFTY headed


NIFTY has been subject to a lot of speculation over the last couple of weeks owing to recent volatility and another test to take out the top. NIFTY marked a psychological high just below the famed 9k mark.
Then we have had a decent sharp correction testing the recent uptrend. There are multiple macro factors in play in upcoming time which will also shape up how markets are behaving.

One of the big factors that has gone unnoticed is that the corporate loan market in India is not really picking up and most corporate are on a bond buying spree. What this means is that corporate are not really looking at business expansion and are playing safe (i.e. they see no demand).



                                       Syndicated Loan Data (Source:Bloomberg)

This doesn’t auger well if we are looking for markets making new highs or if we expect India to be growing at over 7% GDP as earnings will soon fall behind. ( The data suggests that from a loan point of view we are at the lows of 2008)
This will of course mean further pressure on the central bank for rate cuts and that can pump up the markets.
Let’s now look at this from a technical perspective. NIFTY futures have been largely trading within this channel since Feb this year. A breakout or a breakdown outside this channel will lead the next round of market moves.


                                                    NIFTY Futures Daily Chart

Now, why did we choose to write this now? Well here is another interesting analysis. We have done a quick analysis where NIFTY futures formed an Inside candle two days in a row (What this means is that the subsequent two days candles are within the range of the first day). The white dots represent the occurrences.  We had 5 such instances in the last 1 year and 2 of them being in September along. Most of this has always been preceded by a big price move. So brace up for that and this can be a good trading opportunity keeping the channels in view.
There are two seemingly important impact events over this week (FED and BOJ ) this can be a catalyst but eventually markets take their own course once the dust settles and many times most of these are factored in barring surprises as well.

Wednesday 27 July 2016

BankNifty near term trade analysis


 BankNifty in range of 18900 to 19070. Breakout of this range will move to 19180 and above it 19360, on downside it can slide to 18580 below 18900 which will make Nifty fall below level of 8500.

Friday 29 January 2016

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