Note : This is not a recommendation and I am not a registered analyst,
these are just data points and an assessment of the positives and negatives
from a longer term point of view.
Nifty Weekly
Chart 1. Despite the carnage, the
combined portfolio has done better than a vanilla ETF. Since beginning of
November (all 3 strats live), the strategy portfolio has lost 2.67% with a
current drawdown of -5.22% whereas the Nifty ETF lost 5.58% and has a current
drawdown of -9.07%. Even if all stop losses were to hit tomorrow, the
theoretical loss on the portfolio is a further ~9% from here – that’s within my
risk profile. To confess, I have been reading for years that diversification
helps but never got around to implementing it, but now thankful that I did
implement it and so far bonds have been a saviour!
Strategy 1 & 2 based on Nifty TRI
data remain long and I am holding Niftybees. Bond strategy also is in buy mode
and I am holding a 10Y bond fund. Green line is up means buy mode and green
line at 0 means exit mode.
Looking at other data points in the
charts below, looks like the shit storm is just getting started L
Chart 2 Nifty total returns/10 year Bond index ratio is BELOW its 40-week MA &
momentum has shifted to Bonds, both indicating longer term outperformance of Bonds
vs Nifty.
Chart 3 Longer term intermarket strength as per the RS matrix is in Realty, IT
& FMCG. With Metals and Energy at the bottom.
Chart
4 2 out of 10 of the broader indices are above their respective 40-week MA, and just
1 sector index is above its respective 40-week MA. 6 to 12 month forward
returns on Nifty have generally been negative to flattish at these readings.
Chart
5 Avg. & Median distance of all sectors from their 52-week closing high is
at -17.6% & -16.1%. Barring 2008, a few more points down and seems we will
be in buy the effing dip territory.
