Chart Summit India Recap

Shrikesh Pabari, CMT is a Director of Sales and Trading at Credit Suisse in India. While a replay of his presentation is unfortunately unavailable for compliance reasons, he was able to walk us through how institutions create the support/resistance we see on the charts.

By spreading out large orders throughout the day and utilizing tools like the Volume Weighted Average Price (VWAP), he and other institutional traders attempt to "work" large client orders in the market to get the best execution possible. Institutions are what drive the trends in the market, so understanding how they operate and "hide in plain sight" on the tape is a valuable perspective to have.

It was also interesting to hear the differences between Indian markets where all of the action flows through the exchange and more developed US markets where a lot of the action takes place "off-exchange" in dark pools and other vehicles. This remains an edge for the Indian market participant. They have the same information other players do, even if they don't see or receive it as quickly.

Milan Vaishnav, CMT, MSTA is an independent consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services. His presentation focused primarily on long-term trends and relative strength, which is very helpful during periods of market stress where there's a lot of "noise." One point I enjoyed in particular, is that the trend in Nifty 50 vs Bank Nifty, which has been in a secular decline for over a decade appears to be reversing and suggesting Nifty is set to outperform.

Click on chart to enlarge view. 

If that's the case, I'm interested to see if the broader market can move substantially higher on an absolute basis if the largest sector weighting (over 30%) is underperforming. Vishal seems to agree given he's seeing Nifty resistance near 9,800-10,000 that is likely to keep a lid on any strength in the weeks and months ahead.

He also went over the areas showing positive, neutral, and negative relative strength readings. Below is a chart of those showing positive relative strength longer-term, including Pharma, IT, and FMCG.

Vishal Mehta, CMT is an independent algorithmic trader and founder of www.marketscanner.in. I really enjoyed the simplicity of his presentation, which focused on one indicator and how he uses it to find and execute on opportunities in the market.

But first, he began by speaking about how while history may not repeat itself, it often rhymes. What he means is that while every situation will not look exactly the same, they often look very similar. This occurs because markets are driven by the human's involved in them...and humans - are now and have always been - driven by the emotions of fear and greed. As a result, we often see the same type of patterns occur in markets over time. Vishal provided some great examples of this, like the action from the 1929 and 1987 market crashes.

The rest of his presentation was centered around the Moving Average Convergence Divergence (MACD) indicator, which measures the momentum of a security. He described in detail how it's constructed, how it behaves, and how he utilizes divergences in price and MACD to identify potential turning points in the market. This, combined with his study of market history provides a consistent edge in the market. Overall, Vishal's presentation provides extremely helpful context for anyone interested in the MACD or other momentum indicators that behave similarly.

Rashmi Shastry, CMT is an Equity Research Analyst at Enrich Investments and delivered an extremely detailed and well-organized presentation on her process and outlook. From the outset she spoke about her top/down process to forming a market view, starting with timeframe and moving into index view, identifying trends, sectoral indices, and then establishing levels.

Next, she discussed her "calls selection process", which consists of four steps and provides a really strong framework to approach the market. Having a clear and organized process is key to consistency in markets, so her focus on process really hit home for me and I think is an important takeaway for everyone who attended.

Rashmi also shared some perspective on the Nifty's 4-year cycles. I've not incorporated time cycles into my process yet, so this was interesting to see and something I'll have to explore more.

Her perspective on breadth was also very helpful. By creating a custom advance-decline ratio, she could see that the number of stocks participating in the market's rally in 2018-2019 had diminished greatly over time and that downside risk was elevated.

Overall her presentation highlighted the benefits of including a broad amount of data points in your analysis and using a weight of the evidence approach to come to a conclusion. I highly recommend taking another look at her video replay if you haven't already!

Ashish Kyal, CMT is the founder of Waves Strategy Advisors and Ashish Kyal Trading Gurukul. He provided a great perspective on Elliott Wave, which is a part of Technical Analysis that's not as widely followed or understood, and how he uses it in the market to make money.

I enjoyed his analysis of the 1987 and 2008 crashes in terms of time, magnitude, and recovery path...which he then compared to the 2020 bear market. Below is his chart of the Dow Jones Industrial Average in 1987 and the Nifty today, which he used to conclude that a sideways consolidation or further downside are higher-probability outcomes than a V-shaped recovery.

Later in his presentation, he discussed what Elliott Wave and Neo Wave are, their differences, and some classic examples using the current market environment. As someone who is not an Elliott Wave practitioner, I found the explanations helpful and will definitely be looking more into how I may be able to use this tool/method in my own process.

If you have any interest in Elliott Wave, I would highly recommend checking out the presentation in full.

During CS India we also had two leaders from the CMT Association join us to talk about the organization's goals and initiatives around the globe.

Early in the day, we had Joel Pannikot, who is the Head of the India Liason Office at the CMT Association in Mumbai. In addition to speaking about the value for members of the CMT Association, like knowledge, career development, and network, Joel spoke about the India-specific initiatives in place to help grow the organization.

Some of the primary ways that outreach occurs is through chapter meetings in seven cities, web-based events like Chart Summit India, the annual summit in Mumbai, an advisor network, an academic partner program, and content through a newsletter, podcasts, and other avenues. Most importantly though, is members of the organization representing our community in front of their peers, clients, etc. through the great work they're doing and the value they're adding to those around them.

Later in the day, Tyler Wood, who is the Managing Director of Global Business Development at the CMT Association, joined us to discuss the organization from a global perspective and provided more information about the CMT Program.

The CMT Association has over 5,000 members and affiliates, 35,000 participants in events, and 137 countries all involved in navigating the gap that exists between "intrinsic value" and "market price." And how do they accomplish this? By focusing on the core knowledge domains of risk management, quantitative systems development, portfolio management, and applied behavioral finance.

In addition to highlighting the structure of the CMT Program, what its focus is, how the exams work, and more...Tyler also talked about the very tangible value of the CMT Designation. In the graphic below you can see how many candidates saw real results like promotions or more responsibility at work or a salary bump after completing their designation.

Both sessions did a great job of highlighting the CMT Association's mission of establishing and maintaining the highest professional standards among Technical Analysts by educating the investment community about its theory, practice, and application. And, more importantly, they reminded us that while we've come a long way, we have a lot more work to do in continuing what those before us started. As a community, we all have a responsibility in representing and advancing the discipline of Technical Analysis which serves us well and which we've come to know and love.

If you're interested in the CMT Program at all and want to get started, Tyler's presentation included a steep discount code for the Wiley CMT Curriculum...so be sure to go back and watch his presentation at ChartSummit.com/India.

This was a truly great event and I've only just scratched the surface on all of the content covered. I highly encourage you to check out all the videos for free at ChartSummit.com/India, it'll be well worth your time.

- Bruni