Financial Daily
from THE HINDU group of publications

Saturday, July 07, 2001



Variety | Next

The moon and six pence

Nilanjan Dey


HE doesn't promise you the moon, but tracks lunar phases anyway. His intention? Establishing a correlation between the moon and the markets, both for stocks and foreign exchange. And he claims to have made a success out of it. Meet Mr J.P. Singh, a techn ical analysis enthusiast who goes beyond mere charts and numbers.

The assessment is based on the assumption that the markets, like so many other things in life, have a rhythm of their own. The rhythmic ups and down in the charts are influenced by the moon. From one full-moon to another, lunar phases can be mapped out a gainst pricelines, say rupee-dollar rates.

An experienced `chartist' can actually make use of lunar movements to take a position, put a stop-loss and ultimately realise profits, says Mr Singh. The concept, he adds, is backed by data that go far back into the hoary past.

Mr Singh has no formal training to fall back on. An early start took him to the markets. His readings and an ever-growing interest in technical analysis form his core strengths. One is taken in by his confidence, which is suitably buttressed by the long print-outs that are displayed on the table.

``The idea is not new. In the past, it has attracted philosophers and stock market pundits alike. However, it could be positioned more objectively in the modern context. It is a matter of attitude and one must have a certain frame of mind to appreciate i t,'' he maintains.

These words are echoed by Mr Rahul Mohindar, a city-based technical analyst, who underlines the need to do extensive backtesting. ``It is possible to get a feel of the markets, and even make projections, if such backtesting is done accurately and over pr otracted periods,'' he tells Business Line.

If it is a `Yes' for stocks and forex, why will it not apply to other commodities? ``I don't know for sure. But my guess is that it could hold true for certain other things as well,'' says Mr Singh, again standing by the premise that commodity markets, t oo, have distinct rhythms. ``I did try it out on jute, but gave it up later,'' he adds.

This is not to suggest that the board sentiments affecting the markets can be ignored at will. This apart, there is the possibility of making mistakes, and certainly there are aberrations (`dropouts' in analystspeak). However, these are so few and far be tween that a committed `chartist' will not be too distracted by them.

The charting process has changed in terms of technology, and need not be manually done any longer. It is now supported by software packages -- like the imported books, these are not cheap -- which get upgraded constantly. Of course, such technological in novations help, says the analyst, who himself was among the first to use Metastock (once a popular tool) in the city.

Times have changed since then, and he has graduated to more advanced analytical styles. A far cry from those early days, when one would have had to spend a lot of time making sense of raw data culled from the few sources available, not excluding RBI and Reuters.

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