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Tuesday, 23 April 2019 15:40

The system behind our 100% correct market forecasts and why BJP will win again

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Can any analysis forecast outcome of events like Brexit, or trade war, or India’s elections?

Yes. Though it is difficult to judge an outcome where personal opinions are involved in decision making. But there are experts who have in-depth knowledge of most of the key factors. For instance, there are political experts who understand the ground reality of Indian electorate. They interact with common people, traders, businessmen, and have an unbiased view. These people have fairly accurate view of the outcome. But, how can one know who are these people and what are they thinking?

This brings us to an interesting phenomena that world over, the stock markets have always been correct about future of economy in the long run. Markets are never wrong, and they are brutal, only the smart investors succeed. Small and retail investors are always at the receiving end.

In fact one of the simplest indicators of markets is mutual funds inflows, when inflows decline for several months, that indicates a buying opportunity, and when there is a frenzy of inflows, that may be the time to exit. Just look at the recent rally, markets have been going up since November 2018, and the mutual funds inflows are declining from November 2018 after hitting a high in October – exactly reverse!

It simply validates the fact that retail investors are losers. They always enter when the markets have reached almost mid of its rally and exit when markets are near the bottom. And this is true for even developed markets like US – see the chart below –

fundflows.jpg

 

So what does the current rally signify?

This rally picked up momentum after the Pakistan issue and it undoubtedly implies that markets expected higher chances of Modi’s win and cheered it. Irrespective of whatever one may think about his abilities and achievements, markets favor him – a fact in no uncertain terms.

Is there a better way to forecast markets?

It is difficult to find who has the ability to correctly predict the election outcomes.

There is only one objective way to ascertain the future – to build an algorithm that can predict the major market turning points. If it works for the past (back-test for a very long period) under all kind of circumstances, then obviously it will predict the future also. We developed one in 2013, and since then it has been 100% correct in all its forecasts. All forecasts were posted online for everyone to see. Our last forecast was made in January this year when Nifty was 10906, now it is near 11600.

Our record (Click here to check on site)

Entry Signal 

Exit Signal 

Profit

6225
Dec 1, 2013

   

6500
Mar 20, 2014

8570
Mar 23, 2015

2070 points

7980
Jun 13, 2015

8500
Aug 19, 2015

520 points

7900
Apr 18, 2016

10115
Sep 13, 2017

2215 points

10096
Oct 13, 2017

 10900
May 15, 2018 

804 points 

10684
Jun 6, 2018

11430
Aug 10, 2018 

746 points 

10906
Jan 20, 2019 

   

 

What is the current signal from our algorithm?

The exceptional strength of an algorithm is that there is no subjectivity involved. One can confidently go against the herd.

Right now our system is indicating a major bottom after three years. Our system had indicated a buy signal near 7900 and then exit was given on 10115 in 2017.

There have been 4 major bottoms since 2012 and our system had identified all of them.

If you look at the upper panel of chart below, there is a thick red line indicator that when turns up, supported by another dark blue indicator, always coincides with a major market bottom. The recent signal, marked 4, is a clear indicator that we are at a major bottom and can expect a substantial upside from here – also implying win for BJP.

niftydemo

Till now this system has not lied.  

 

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