Relative Performance Bias (BSE Metals vs. Nifty)

Relative performance can be used to judge market bias. A classic example is the gold-silver ratio line. When the ratio line is trended down, it’s time for prosperity and if it moves up, it’s time for market recessions or crisis. This is the reason gold-silver ratio is also referred as a sentiment indicator because it talks about market bias. Jiseki performance cycles are another way to look at relative performance. There is another novel thing they do. They let you look at relative performance at all degrees of time smaller or larger. To illustrate our idea further, we compared one of the best performer sectors (on both the daily and weekly rankings), BSE Metals to NIFTY.
First, we had a look at the individual Jiseki cycles for BSE Metals. Both the daily and weekly cycles have a negative crossover and are pushing lower from extreme rankings, suggesting further negativity for the index (slide 1). Second, we plotted the relative Jiseki between BSE Metals and NIFTY which suggested that BSE Metals has been also outperforming the blue chip Index for more than 6 months (slide 2). This again confirms that BSE Metals is a best performer and hence a top potential short (reduce) sector for the weeks ahead. The relative performance (RP) between the two indices also looks negative pointing in favor of NIFTY (slide 2). Third, the Elliott case on BSE Metals suggests an impending breakdown at 15,200 and further negativity till our target at 14,000 levels (slides 3 and 4). A weak BSE Metals cannot be good for the overall market and with Nifty at key multi month trendline supports at 5,400-5,450 levels we have all the settings ready for a crack. A break sub current supports at 5,480 should give us further confirmation (slide 5). Markets are also entering seasonally negative period. The preferred negative view remains firm.

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Coverage India: CNX100 traded stocks and Indian Indices.
Michesan Anna-Maria, Head of India Research. Anna discovered her interest of markets immediately after completing her graduate studies in Economics. She followed it up with post graduate studies in corporate finance. A host of research work in behavioral finance, option strategies and quantifying market sentiment followed. Anna covers Indian equity and combines Elliott, Time Fractals and Time Analytics to deliver accuracy across time frames. To review some of her work, check out the annual India accuracy report 2009.