iCharts Discussions

[rk_a2003]

Has any trader with long experience seen such a strange behavior of US markets?

Economic data announced with slight positivity. Markets are going up jubilantly giving a reason that economy is under recovery.

Some other data come out with negativity, market pause or go down and within no time it recovers… consolidate and close higher citing a reason that as economy is not recovering QE3 will be announced soon.

Why such a strange behavior why it is going up and recording new 52 week highs day by day. Something is strongly driving it up whatever might be the state of world economy.

With such a behavior it also is pulling up all the world markets.

Really amusing! …..How long it continues……let us see.

[rk_a2003]

All of us know that a correlation exists with Index movements and FII’s buying or selling and also with DII’s buying and selling. It can give us a rough idea of index movement direction. We can see from the chart which made an attempt for plotting Sensex movement with FII’s net activity on monthly basis.

We may observe that whenever FII’s net buy on monthly basis exceeds or near 10000 crores Index topped out on relative basis and it bottomed out in case the figure exceeds or near -10000 crores.

Right now on monthly basis FII's bought around 8000(P.S: It's infact 6600 to be precise). We also can observe that sometimes the flow reversed from this figure and so the Index. Else the rally has steam for another 2000/3000 crores where probably index tops out. We may use it as a compass, may not be useful for timing. It’s a directional indicator of the markets.

The Chart is taken from a website .The plotting is not so efficient. I tried to mark some values of Sensex on it. I request members with charting skills to try for plotting Sensex/Nifty and FII’s,DII’s net flow on monthly/quartely basis with proper scalar indications and post it here for further analysis.

We may also compare this with Rupee/$ exchange rate which was posted in this thread for finding out index bottoming out on relative basis.

[vinay28]

RK, FIIs net by has topped out at 1000cr and hence index has followed suit

[rk_a2003]

Yes Vinay,

During peaks even the net value of monthly FII's flow reached above +20000 also.

At that time the Index topped out on relative basis.

[vinay28]

Interesting thing is that once it has gone beyond 8K to whatever top, it has reacted for at least 2 months

[rk_a2003]

We have seen 3 year and 6 monthe BDI-Nifty copmparision charts posted by Vinay.Now look at this 3 year BDI chart exclusively with some more anlysis to understand where the World economy stands.

''.....the Baltic Dry Index—measures the shipping rates of transporting bulk dry commodities worldwide.

It is considered a key indicator because it gauges the demand of the basic raw material inputs that go into every factor of finished goods, building materials, and food.

This key indicator registers a high number when economies are strong because of strong demand for all commodities like zinc, iron ore, iron, steel, etc. In an economic slowdown, demand falls, and so do rates.

Due to the economic slowdown, in January of this year, this key indicator reached a 25 year low. Since then, the index has just continued to fall, and remains near its low. Since 2008, this key indictor has plunged 90%!

Here is the three-year chart, which is further evidence of a global economic slowdown:

During the economic boom—back in 2006-2007—the orders were flooding into the shipbuilders for new container ships to pick up and deliver all of these raw materials. The premise was that the boom was only going to continue.

After the financial crisis of 2008, the orders for new containers could not be cancelled, resulting in a glut of ships sitting empty or delivering goods for literally pennies…sometimes at a loss.

One of the last remnants of Britain’s industrial revolution, Stephenson Clarke Shipping, just went bankrupt after almost 300 years in business. (Source: The Telegraph, August 13, 2012.)

The company stated that while it was able to weather previous economic slowdowns, it found this current economic slowdown to be one of the worst in its history and, as no rebound was foreseen for at least a year, there was no way it could continue operating.

Germany is home to roughly 40% of the world’s container shipping fleet. The financial crisis wiped out 100 German ship funds. Since then, the global economic slowdown has seen 70% of the remaining shipping fleet in financial distress, with 800 of them on the brink of bankruptcy!

The fleet was hoping for a pick-up in traffic from Asia, especially China, but, due to the global economic slowdown, this has not transpired. Container shipments throughout Europe continue to fall, while shippers remained hopeful that this region of the world would at least stabilize. But with the global economic slowdown, the continued fall in demand has been relentless. The fleet was also hoping for a pick-up in North America, but it seems it is not meant to be.

There are still many clinging to the notion that economic growth will accelerate in the second half of this year, but according to the Baltic Dry Index—a key indicator—and comments from the shippers themselves, which is even a more reliable key indicator, we can expect more of the global economic slowdown instead, with the real possibility of a recession......''

Sam, I remember that some time back you said that the relevance of BDI is not that much.I am curious to hear further substantiation on it.

I feel even in modern era the basic industrial raw materials are still being shipped, airlifts not yet replaced them especially for intercontinetal transports.

[vinay28]

RK, it is near its lowest since 2008 but is also shwing +ve div developing on rsi and macd. Of course, on such an index, a +ve div may take its time to yield results.

[pkholla]

rk wrote "One of the last remnants of Britain’s industrial revolution, Stephenson Clarke Shipping, just went bankrupt after almost 300 years in business. The company found this current economic slowdown to be one of the worst in its history and, as no rebound was foreseen for at least a year, there was no way it could continue operating."
It appears that some people have self respect, and sense of shame unlike bevdas who continue to fool the public, not paying salary for 6m, playing with Tipoo Sultan's sword, choosing calendar girls, chairing beach party in Goa and flagging off F1 races. There may even be direct pipeline from USL and UBL to his farmhouse to quench his giant thirst!!! How this ulloo-fooloo got $10bn loans with $10mn assets???
Prakash Holla

[vinay28]

aah, finger pointing has begun prakash.

The cause is the piles called king-fissure.

[pkholla]

[psalm]

[vinay28]

rK/Sam, BDI being a measure of bulk shipping rate, it may be a better to see container movement over the last 1-3 years

[rk_a2003]

[psalm]

[vinay28]

Sam, SCFI rose by over 60% after dec. That's can't be due to speculation like in equity as it shows actual freight movement. Also, while iron ore prices have gone down, you need to compare them with world gdp over last 3 years to look for disconnection. By the way, even as we talk about this and impending gloom, cement output in India is continually increasing and that's not just due to real estate. There is a lot of acitivity going on in small cities and towns.

Chinese economic doom will be a blessing for India as commodity prices will fall e.g. iron ore.