The CNXIT Kitchin

The average 3.3 year KITCHIN cycle defines cyclicality in the economic cycle, assets, stocks and indices. The reason Kitchin assumes more significance in capital markets has also to do with its periodicity. At 3.3 years, most of us who were around in 2000 have witnessed nearly two KITCHIN CYCLES. Only investors who have been in the market since 1998, (if they have survived the ongoing financial crisis) might have the opportunity to live a JUGLAR, a 9-12 year cycle. The Juglar should finish sometime in 2011-2012. We are cycle blind, as a short KITCHIN cycle also seems too large for our investment horizon.
Even from a trading perspective, researchers have highlighted the need to capture larger trades and trends. Brian J. Millard in his book CHANNELS and CYCLES talks about an optimum trading interval as a key to minimizing losers and maximizing winners. As the number of trades made in one year rises, the probability of making a losing trade increases. The ideal trading time back tested by the author is around 2 months, which incidentally is a third of six months, a key periodicity linked with the KITCHIN. We have illustrated the KITCHIN here on CNXIT in continuation of our last week’s article on TECH REVERSAL. The periodicity highlighted are the 6 month cycles, which suggest a reversal on the Index till MAY – JUN 2009. This is in sync with the ENDING DIAGONAL reversal Elliott fractal we highlighted last week.
We have been bearish on TECH for over two years now. And this is what we said in our INDIA OUTLOOK 2007 two years back in JAN 2007. “Technology: Despite the noise that Infosys and Indian Tech gets abroad, the sector has underperformed every other sector in 2006. The underperformance should continue. Technology is a Middle expansion sector and does not do well in late expansion sectors (current). We still believe the technology sector prices should correct sizeably from current levels. We will not be surprised if Technology gives a negative return for 2007.” Now we are betting on a turn here. The illustrated TABLE also suggests a move up in ranks in performance over 6 months, 3 months and 1 month for CNXIT. The index has moved up despite all negative news and a sector leader going bust. A classic proof of relative outperformance. We also have the candle penetration pattern at the primary base.
The latest issue of WAVES.INDIA also carries ANTICIPATED and HAPPENED cases on TISCO, BSEOIL, BSE Health Care, BSE Power and BSEBANK. We continue to look at a turn around on metals and are still looking for more clarity on PREFERRED and ALTERNATE view on NIFTY and SENSEX.
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WAVES.IND. is a perspective product published on Monday and Wednesday. The report highlights Indian Stock Market top sectoral Indices and Sensex (BSE 30) viz. BSEOIL, BSESC (Small Cap), BSEMC (Mid Cap), BSEHC (BSE Health Care), BSEPHARMA (Pharmaceuticals), BSECG (Capital Goods), BSEBANK (Banking), CNXIT (Technology), BSEFMCG (FMCG), BSEAUTO (Auto) etc.. The product also covers all the 30 Sensex components. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools, sentiment indicators and other alternative research tools like INTERMARKET to spot outperformers.
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